I’ve referred to this in passing, so I thought I’d define it more clearly.
The ‘fishing net’ is a term used analogously to a real fishing net. When a fisherman goes out to sea his net may be of a certain type. He doesn’t expect to catch every fish. Different mesh sizes means that he’ll catch fish only over a certain size.
In trading terms I’m setting up my strategies to do similar. Like the fisherman, even when the catch comes in, I’d be tossing back into the ocean certain fish that were not ‘marketable’ (i.e. tradable). So how do I set up the net? Read on:
- I’m signed up to various reputable websites, that give sound ideas on what’s coming up in terms of opportunities.
- I track some of those opportunities.
- On my chart or trading platforms, I’ve set up alerts on various indicators e.g. actual price levels, alarms on trendlines or other indicators such as the Relative Strength Index (RSI).
- I’m also watching some key charts with my own eyes, in case things change suddenly.
The point is – it’s difficult to track 20 opportunities out there on a daily basis – you’d go mad – or do very little else. The fisherman does not dive into the open ocean and chase after several big fish – he casts his net – and when the catch comes in he decides what to do. So in tracking our opportunities we can do similar.
So I estimate that if for example I have RSI indicators on 20 instruments/charts, then in a month I might expect 5 of those to be triggered. Of those 5 maybe 1 or 2 may be tradable. It doesn’t mean I have to trade them. The other 15 keep running in this electronic net and I add more – that’s the good thing about electronic stuff, there is practically no limit to the size of the net. So over several months the net will have grown bigger and more favourable opportunities present themselves. In practice, I’ve set alarms on several instruments across a some key indicators, so I reckon that I’d have no shortage of opportunities to assess.
This is a strategic approach to catching opportunities. I will recommend to all new traders to adopt similar. I’d also like to recommend Tradingview as it is quite a capable charting platform that can help very easily in setting up your ‘net’.