TRADES MULTIPLE MARKETS
Our strategy trader has observed that to maximize his return, he must trade
multiple markets. At any given time there may be only one or two sectors moving.
If you are only trading one market, you will have to wait for the next big move
and fund the drawdown. The more markets you trade, the greater the chance that
one will be in a big move. It is also likely that the profits in the markets that are
moving will be greater than the drawdown in the markets that are not. That is the
ideal situation because you can then reduce the fluctuation in equity and have a
more predictable cash flow.
Our strategy trader now understands the age-old notion of market diversification.
With back testing, he is now able to test the combination of strategies and
markets and how they integrate into a comprehensive trading strategy. An overall
strategy is now coming into focus that includes trading several markets.