I’m Now Profitable trading CFDs: My Main Takeaway
I just did my final accounting yesterday, and I believed I had lost far more on trading CFDs in 2017. My main issue last year was that I thought Dow Jones couldn’t rise further. I felt too bearish in a bullish market. I ended up shorting Dow Jones too many times, which short-squeezed me. But as I saw yesterday, I’ve actually made up for all my mistakes in 2017 last week when I made more than 1.2 million USD trading CFDs. My best trading week so far.
In this bear market for both Cryptocurrencies and Stocks, it’s easy to forget that you can still make money by shorting different cryptos, stocks or indexes.
My Main Takeaway
I do believe I’ve “cracked” the key on how to become a profitable day trader. When I started trading CFDs I always traded on what I thought were going to be price reversals. E.g. when Stoch or RSI showed an oversold or overbought asset. But then, on Friday February 2nd, when I lost more than 340 000 USD, I finally understood an important aspect of trading:
Do not beat the market, follow the market.
You should never try to “beat the market” by outsmarting it. Thinking that “this level will be the lowest point today, hence I’ll go long”. Think about it, if you go long when the price level has decreased over the last hour(s), what is the chance that you hit the correct level for a price reversal? It is slim to none. But if you go short in a down trend market, what is the chance of the price turning in lower lows? Quite high. As long as you monitor the market, and do quick wins, you’ll be able to follow the market instead of trying to beat it.
That’s what worked for me the past week.
Following Macroeconomic numbers and releases
Some of my previous mistakes have been to rely on macroeconomic numbers too much. I use forexfactory.com to follow the releases daily, however, when the numbers released are stronger than anticipated, I’ve always gone long. But sometimes, the market just falls with strong numbers. Some say they “Sell the News”. I’m still following the economic releases, but I do not purely trade on them. I mainly trade on following the market by looking at the moving averages and using candlesticks to find the real trend in the market for the past weeks and days.
The index is jumping up and down like crazy. Look at the graph below of the DJI on Friday. It started at 24.000, fell down to 23.400 (600 points!) and jumped up to 24.400 (800 points!). I shorted Dow Jones at 24.000 and kept that for a while, turning in a nice profit. I was then happy with what I accomplished and left the market. Of course, I should have stayed focused and bought the reversal at 23.400. But right now I’m still more bearish for DJI and only want to keep short positions over a longer period of time. A rebound is anticipated, but my guess is that we will still see a lower low. The question is, should I short Dow Jones tonight? Will it fall further on Monday, will it stabilise or will it jump higher to 25.000. This is a 100 000 USD question for me. Leave your comment below to let me know what you think.