Become a Master Trader in Three Steps

Apurva Sheth

Last week, I told you about my 87-day trading challenge. I believe anyone who takes up this challenge can become a Master Trader by the end of October. That includes professionals, businessmen, retirees...even you!

Without guidance, the path to becoming a Master Trader can be long and painful. But Profit Hunter readers can follow an easier, more direct path.

Today, I am going to show you three simple steps to becoming a Master Trader.

But first, who is a Master Trader?

A Master Trader is simply a trader with a system that generates consistent returns over a long period.

So, how does a trader build a trading system and become a Master Trader?

It all begins with three simple steps. Put these three basic building blocks in place and voila! you will have a successful trading system.

Three Steps to Build Your Own Trading System

  1. Identify Market Environment

    The quality of a trading system depends on how well you can define the current market environment. At any given time, markets can either be rising, falling, or trading in a sideways range. You need to ask yourself, 'What is the market doing now?'

    You must define the current market environment and what it could do in the future. You can use various tools - trendlines, moving averages, ADX, etc. - to do this. Once you have the answer, you can move forward to the next stage.

  2. Design and Apply Trading Systems Suitable for Specific Environment

    Once you have a view on what the market could do, you need to design and apply a trading system suitable for that market environment. You need to apply different strategies when markets are trending and when they are moving sideways.

    So for example, in a rising market, you will apply trending strategies and filter stocks that have the best setup. I have already shown you examples of this here and here.

    In a sideways market, you will apply mean-reverting strategies and filter stocks that look ready for a pullback to the mean. There's an example of this strategy in today's market notes section.

    Knowing when to apply which strategy is the key.

    Below you can see a flow chart of the decisions I go through before recommending a trade.

    I have designed many strategies for specific market environments, some of which I list here. But don't worry; I will talk in more detail about them in the future. Right now, I just want to show you the process a Master Trader should follow.

    Now I know this can seem overwhelming at first, but let me assure you it doesn't take long to internalise if you have correct guidance.

  3. Decision Tree of a Master Trader
    Decision Tree of a Master Trader 

  4. Execute Trades with Discipline

    Finally, when the system signals a trade, a Master Trader follows it without fail. More importantly, if there isn't a trade signal, he sits patiently. If the system does not signal a trade, the Master Trader knows it's time to sit on cash.

    Most traders often fail at execution. They lack the discipline to exit the trade when a stoploss is hit. They let go of their winners and ride their losers. But a Master Trader keeps a check on his emotions and trades profitably over the long run.

Now, while this is a broad framework, you can use it to become a Master Trader. You can implement these three steps on your own, and you can get there.

Or, you can work with me to speed up your learning curve.

I am sure you must be aware that I have thrown up an 87-day trading challenge. Many of our readers have already accepted the challenge and are on their way to become a Master Trader. But this is not for everyone - if you cannot trade with discipline - this might not be your path. But if you think this is for you - now is your chance.

My 87-day challenge expires tonight at 11.59 pm. Click here now and learn how to make real profits as a trader.


Market Notes

A Trading Strategy for Non-Trending Markets

In previous market notes, I have showed you how I generated double-digit returns with tools including trendlines, trend channels, and support and resistance.

My subscribers generated 10% returns in just six days in Future Retail Ltd. They also got a 10.62% return in just nineteen days with Eicher Motors. Just from using these simple tools. Identifying these trades was relatively easy as the stocks were trending higher.

But what about when stocks trade dull or sideways? When the above returns are hard to come by?

This is when you have to sit on cash. But that doesn't mean you stop searching for trading opportunities. Sideways markets sometimes provide excellent opportunity. Knowing when and how to trade them is the key.

Last time, I showed you how to trade trending markets using support and resistance tools. Today, I'll show you how we can trade range-bound markets using the same support and resistance tools.

Trading Range-Bound Stocks

A simple strategy I use during a range-bound market or a market consolidation phase is to buy at the lower end of the range and sell at the higher end of the range.

For example, once I have spotted a stock that's trading sideways - bouncing from point B and D and retracting from points A and C - I would recommend to buy the next time the price approaches the bottom end of the range. So I would recommend a trade at point F with a stop loss right below it and would exit anywhere between the middle to upper end of the range depending upon the risk-reward ratio.

Although returns during range-bound markets might not be as great as returns during trending markets, they can still be good and consistent.

Now I'll show you how I generated an 8.38% return in Tata Elxsi for my subscribers when the stock was trading in a range.

Tata Elxsi Traded in a Range of 1,700 - 2,300
Tata Elxsi Traded in a Range of 1,700 - 2,300 

Tata Elxsi Ltd had been in a solid uptrend from September 2013 to August 2015. However, this uptrend came to a halt in August 2015 when it hit a high of Rs 2,317. Since then, it has been trading in a broad range of 1,700 to 2,300.

Since the stock had a history of consolidating for long periods before resuming its uptrend, I knew this was an opportunity to trade the range.

On 19 January 2016, as the stock approached the lower edge of the range, it hit a low of Rs 1,637 and bounced strongly with good volumes to close the session up 4%. Thus I recommended my subscribers consider buying the stock on the same day with a stoploss just below the broad trading range at Rs 1,650 and a target of Rs 1,842.

The stock went live the very next day. And it hit the target price in just five days. The trade generated 8.38% returns in less than a week for my subscribers. Although we exited the trade at our target price, the stock went all the way up to touch the upper end of the range of Rs 2,300 over the next four days.

So you see, even during the non-trending phase, you can earn decent returns if you have the right system and tools.

Simple technical analysis tools helped me lock decent returns in just days. I believe you can use these tools all by yourself to generate decent returns in any market conditions, be it a trending or a non-trending market. It will require a bit of time and effort, but I challenge you to go from zero to trader in just 87 days.

If you are ready to take up my challenge, sign up NOW!

From the Market Wizards...

"Fear, greed, and ego are very expensive monkeys to have on your back while trading." - Steve Burns

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2 Responses to "Become a Master Trader in Three Steps"
01 Aug, 2017
very nicely explainedLike 
bharat gorasiya
01 Aug, 2017
I want to update of 87 days studyLike 
We request your view! Post a comment on "Become a Master Trader in Three Steps". Click here!