The Virus has changed the lives of millions of people globally and the changes will keep coming. How do you prepare? How do you get ready? How do you know what to do and more importantly when to do it? In this interview, we ask Lachlan about trading tactics for a Post COVID-19 world. Lachlan is also well-known for not holding back on his opinions, so we are super excited to be interviewing him again.
YTE – Since our last edition, the world has changed forever due to COVID-19. What has changed for you and how do you think the world will change post COVID-19?
Lachy: That is a great question you raise. As a day trader of many years, for me COVID-19 has only increased the volatility in the markets. As we take advantage of this volatility daily, the volatility is great news for talented traders. On the flip side, I think COVID-19 has been a major wake up call for millions of people globally and may have changed people’s understanding of money forever.
There is no doubt that the virus has redefined many people’s lives and redefined how people think about having a job and having a cash reserve. Many people I speak to who were very ‘job centric’ are now questioning the security of that approach to life. Many others I speak to are also questioning their lack of a cash reserve and what they need to do to fix that lack.
There is nothing like a global correction to catch people with their pants down and the virus has been one such correction. I am not going to harp on the negative here, instead I would prefer to harp on the great lessons that have been learned from the virus and what YTE readers can do in order to not be susceptible to such corrections again.
YTE: What can YTE traders, globally, do to protect themselves against another correction?
Lachy: That is another great question because I do not think this is a single bounce correction in the market. I think the nature of the financial markets has changed forever and I think the volatility that we are currently experiencing is the new normal.
I do not want to harp on articles that I have been writing on trading for years, but the same tips just keep proving true.
Tip 1. Become a day trader, firstly as a side hustle and secondly as a backup for your current employment.
The COVID-19 crisis has highlighted how frail the concept of a ‘job for life’ really is. I am excited that so many people are turning to day trading as a potential source of daily income. A goal of $100 per day is very achievable trading the futures markets we trade. A $100 per day goal can quickly develop into $1000 per day goal if you are disciplined and patient and happy to treat trading as a profession as opposed to a hobby. You may seek to try trading as a side hustle first, sure, but very quickly you will realize that day trading the futures market is a multibillion-dollar daily game. Just be super careful not to fall into a couple of little trams that I am going to share with you in Tip 5.
Tip 2. Develop the capability to trade currencies, commodities and stock markets all using one strategy.
As a futures trader, I have the freedom to trade all the major currency cross pairs just like commodities and stock indexes alike. This means I have the freedom to trade oil when it is falling and gold when it is rising. I have the freedom to trade the S&P 500 (US Stock Market) and the FTSE (London Stock Market) just like I have the freedom to trade cryptocurrencies. The exciting thing about futures trading is that you can trade any market in the world that is worth trading. You can also build one strategy to trade all these markets simultaneously. This means you have the capacity to trade the market that is offering the volatility on the day. You also have the freedom to move in and out of the different market classes when you deem necessary to suit the volatility. This is a massive advantage held by futures traders in the markets and an advantage that has made the COVID-19 crisis a significant gift as opposed to a problem that we have to dwell on.
Tip 3. Have a short time frame perspective.
As a futures trader, my average trade is between 7 and 15 minutes. This means that I have no money in the market overnight and more importantly, no money in the market over the weekend. This means I am protected against sudden corrections that would otherwise paralyze longer term traders. This approach also means I can get in and out of the market multiple times daily with the intent of compounding my return in the current market volatility. Short- term trading offers traders a strong risk mitigation strategy that is often overlooked by traders seeking to hold longer term and hence more vulnerable positions.
Tip 4. Please make sure you can trade the market both up and down.
I have the freedom to trade the markets both up and down meaning that rise or fall, I get many new trading opportunities daily. I think it is almost impossible to predict where the markets are going to be tomorrow, hence, I need to be able to move with the ebb and flow of the markets daily regardless of their direction. Good futures traders shine in volatility and I believe the volatility is here for a long time to come. A successful post COVID-19 trader is a trader that can move quickly and deliberately in and out of the markets with a strategy that is designed to complement volatility.
Tip 5. Avoid the hype and the deceptive marketing.
In my trading, I can achieve all the above, very affectively, as I do not trade through conventional OTC brokers. I am happy to say that my chance of success is massively enhanced due to the ‘broker free’ trading model that I use. I trade directly to and from The Chicago Mercantile Exchange via a regulated clearinghouse. This means that there is no one on the other side of the markets to trade against me when I take my trades. There is also no one to manipulate any aspect of the markets while I am trading them, so I have a pure and interference free market environment to take advantage of. Every trader globally can trade without broker interference if they choose. Now I do not want to add a negative to the current global crisis, however, this is a massive point for YTE readers globally to acknowledge and then take advantage of.
The COVID-19 crisis has seen a mass of advertising flood the internet praising the potentials of day trading, which is great, however there is a trap here. Not all forms of trading are equal. Do not be romanced into opening an account with a free trading platform if it has been recommended to you by a random broker. Please remember that they have the freedom to trade against you every time you take a trade. My humble opinion, sure, but virus or no virus, you will not be in trading for long if you work with unverified brokers. If you want to do more reading on the subject, simply download my eBook from the IDTA website and have a read. I guarantee that this eBook will change the way you think about trading forever and it is completely free and without obligation for YTE readers. The link is at the end of this interview.
YTE: Lachy, where to post COVID-19?
Lachy: COVID-19 has been a nasty reality check for millions of people globally and I feel for anyone negatively affected by what has occurred. I think that the reality check will be ongoing for some time and hence people need to acknowledge this and take steps to protect against it. COVID-19 has exposed many longer term ‘buy only’ strategies for what they really are, and this has hurt a lot of investors. I do not want to make light of a global catastrophe; however, may I suggest that short term trading across multiple market classes is flying and will continue to fly while we have volatility in the markets. The key to our success is short-term risk control and I would encourage all readers to find out more about how they can implement this in their own trading.
YTE: Lachy, thank you for being part of YTE in 2020!
Lachy: As always, my pleasure.