Introduction
The quote “work smarter, not harder” applies to trading in a profound fashion. Within the barriers of the market, minimalism is vital, and those who do more by doing less win.
How do we do more by doing less?
We set needed rules and limitations.
Systematicness and Flexibility
In our approaches, we are mostly flexible. However, some systematicness should blend with flexibility to create the perfect formula. As such, even though being dynamic, intuitive, and orienting mostly on experience yields good results, some mechanic procedures should be applied and adhered to.
In trading, the mechanic side of events could apply to the risk management plan, specific instruments traded, technical tools used in chart analysis and so forth. Thus, we will guide you through establishing balance between flexibility and systematicness by taking a minimalistic approach.
Rules
From having a given amount of securities within our watchlist to exposing a definite proportion of our capital per transaction, we have a set of definite rules that guide us within the vast maze of financial markets.
Below, we go through some of them.
Watchlist
For the past years, we have only been trading three financial securities – EUR/GBP, USD/CHF, and AUD/NZD. By doing so, we are eliminating unnecessary noise and focusing solely on currency pairs that we have accumulate plenty of experience trading.
In a way, every single financial instrument has its own language. Hence, it is more vital to stick with a handful of those and ONLY trade them.
Analytical Tools
Saturating your charts and cognitive space with an abundance of tools might be very damaging and inefficient. Thus, the concept of “less is more” applies significantly here. As such, the less your overcomplicate your charts with indicators, unnecessary tools, and mark-ups, the clearer you see the image of price development.
In our personal practices, the only analytical tools that we use are rectangular boxes (to mark up important levels) and the Fibonacci tool (to identify 50% and 61.8% retracement levels).
Timeframes
Timeframes work in a dynamic way to show you how the price of a given asset is developing. Depending on your trading style, you have to identify and proceed with certain timeframes.
Being swing traders, we only work with two timeframes – the Weekly and the Daily graphs. We use the former to identify general trend direction and important zones, and the latter for entering positions and monitoring price build-up.
Risk Management
Consistently profitable trading demands discipline on the risk management front. Our risk policy is definite – we do not expose more than 1-2% of our total capital per transaction. Anything within this range is acceptable.
Establishing minimalism on this front is of utmost importance when it comes to decision-making. Adhering by a rigid risk policy of 1-2% per trade, you are protecting your capital and mental energy. No self-doubt = No problems.
Conclusion
To sum up, the concept of “less is more” should be implemented by everyone who wants to attain and maintain consistent profitability in trading. The market is a big maze with the only sensible way for survival being the process of establishing a given set of rules and guidelines.
