Why ‘Less is more’ to us
In most professions working more is usually what makes you more money, especially when you are being paid for your time. This concept however cannot be said for trading. In fact ‘Over Trading’ can and usually results in losses!
Trading does not reward the hours you spend staring intently at the one hour chart, nor does it reward how many times you enter or exit trades. You get rewarded by making informed decisions, by being patient and waiting for a trade to present itself.
Chasing the markets around all day, Is not the way forward!
At Bottomcatcher, we are strong believers in ‘Less is More’ less time trading, more time researching and preparing.
If you’re just starting out as a trader, it can be a daunting and challenging experience. If you know absolutely zero about trading the markets, the best advice I can give you is ‘Don’t Go It Alone’ There’s a well known simple reason for this, and that is, the odds of you being consistent at making gains are heavily stacked against you, it’s just the way things are. Trading doesn’t necessarily require a solid education, it’s more of an art which takes years to perfect. The list of factors you need to consider before you even think about trading is just unimaginable.
Having a good understanding of technical or fundamental analysis isn’t going to cut it. In addition to perfecting your technical and fundamental skills, you have a bigger problem on your hands, and that is learning how to control your emotions, which to a newbie trader is easier said than done. In fact, it’s the psychology behind trading which takes an eternity to master, and until you get to that stage, profits are going to be hard to come by.
SO HOW DO WE DO IT ?
At Bottomcatcher our focus is on Identifying breakouts and Inflection points for quick profit-taking. We believe the best trade set-ups are the ones that start working right away, which is why catching breakouts are so important to us, after all, nobody wants to wait around for a trade to play out. If an opportunity presents itself to make a quick return on your investment, why not take it? There’s nothing wrong with that!
Most breakouts occur on high volume and can be identified when certain chart patterns are fully formed, such as Falling/Rising Wedges, Flags etc. These type of trade set-ups are the ones we are most interested in. We tirelessly examine hundreds of charts daily in order to spot the ones which have the highest probability of large price moves.
WHY DO TRADERS FAIL
ONE of the biggest issues a trader faces is timing. Statistics show that the majority of traders actually get their trade ideas ‘RIGHT’ most of the time, BUT at the ‘WRONG’ time. Which needless to say results in losses. This in turn triggers off a chain of emotional reactions which confuses traders into believing they were wrong in the first place, which is not always the case, or they look for excuses as to why their trade idea didn’t pan out, blaming an indicator or some other technicality. This way of thinking is common amongst newbie and intermediate traders and usually sets the tone for the demise of their trading account.
Not many traders like to admit they were wrong, which is why ‘Timing’ isn’t usually on their list of reasons why their trade never played out as they expected. Because if it was down to timing, it would mean it’s the fault of the trader and nothing else.
For inexperienced traders, getting the ‘Timing’ right is tricky, there is no doubt about that. There are just too many complexities that determine price moves and when they will happen. And that’s the CATCH! For this reason alone It’s highly unlikely a newbie trader is going to consistently make gains when trading the markets.
Using Bottomcatcher as a signal provider will fast track you to financial gains, whilst learning at the same time.
At Bottomcatcher our primary focus is to get the TIMING right when advising our members on when to enter positions whether it be Long or Short. Our trade suggestions usually start working right away especially on Stocks and Forex Pairs. The majority of our Day consists of researching and analysing, we like to have a constructive approach to the markets. We don’t overtrade, and we certainly don’t enter trades unless there is a high probability they will work in our favour. A handful of trades each week is all you need to successfully grow your trading account.
Diversifying Your Portfolio
Catching Breakouts for ‘Quick Profit Taking’ is the majority of our work and applies mainly (but not always) to Stocks and Forex Pairs. Our members want to earn fast money and who can blame them, but it’s also a good idea to allocate some funds to longer-term set-ups to complete your portfolio. In a way, this kinda works as a hedge against any short term trades that don’t pan out. Below is information on ‘What We Look For’ on mostly Commodities, Sectors and Indices for longer-term trade set-ups. You can also go here for more information.
WHAT WE LOOK FOR ON COMMODITIES, SECTORS AND INDICES
- Bottoms and Tops
- Turning Points
- Chart Patterns
Finding extremes in assets usually gets our attention, or at least motivates us to dig a little deeper and see if the extreme (or exhaustion) is just noise due to an announcement or some data release, which is usually short lived and can have a tendency to mean-revert. However extreme readings do occur ‘when they are supposed to’ and it’s those types of readings we look for.
Bottoms & Tops
Since we like to get the ‘Meat of the Trend’ a good place to start is at the bottom or top of a trend. Having the ability to Identify a Top or Bottom is most important for trend traders like myself. Getting into position at a Top or Bottom also allows us to place a tight stop loss below the lows or above the highs.
When researching assets, sentiment is our main focus. It tells us the overall attitude of investors, and how their opinions influence market price moves on any given security or asset. There are 5 main groups of traders we monitor in order to gauge sentiment.
Commercial Hedgers: more commonly known as ‘Smart Money Hedgers’ this group of traders have proven themselves to have an excellent handle on the underlying markets.
Funds/Banks etc: These are trend followers by definition, and it often pays to know the exposure held when a trend is in play.
Small Speculators: Terrible market timers, this group of traders often run into trouble at Tops and Bottoms as they become too bullish when markets are peaking and about to correct (change direction), and too bearish when there are no sellers left and demand is high.
Option Traders (small Option traders in particular): Mostly always wrong! Since they are working with a depreciating asset, meaning they lose value as time passes, and their trades are governed by a limited lifetime, they usually end up worthless unless their asset moves quickly in their desired direction, which seldom happens.
Futures Traders: Monitoring this lot to determine sentiment definitely gives us an edge. There are a lot of things they need to consider and understand, which so many of them don’t, like Leverage, Interest Rate Risk, Liquidity Risk, Operational Risks, Settlement and Delivery Risk. Usually sentiment is mixed, but when the overall sentiment on an asset becomes too optimistic or pessimistic, a contrarian’s approach usually pays off.
In relation to Tops and Bottoms recognising turning points gives us further confirmation that a new trend is perhaps underway.
There are many chart patterns out there, some we like some we don’t. Through back testing dozens of chart patterns over the years we have selected our most popular chart patterns that we look for and that we believe are most reliable.
Continuation Chart Patterns
Bullish Flag Pattern
Bullish Pennant Pattern
Bullish Falling Wedge
Bearish Flag Pattern
Bearish Pennant Pattern
Bearish Rising Wedge
Cup and Handle Pattern
Reversal Chart Patterns
Bearish Double Top
Bullish Double Bottom
Breakouts from the above chart patterns (Green Arrows) is confirmation that the pattern is likely to play out.