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For traders, the motivation to explore additional technical indicators often stems from a desire to enhance trading results and refine their existing system. With the abundance of information available about technical indicators, it can be tempting to incorporate new tools into your strategy. However, as the decision-maker in your trading journey, it is crucial to approach this process with a structured mindset.

The first step is to ask yourself a fundamental question: “Is it the right time to explore the use of another indicator?” This article outlines four critical questions you should consider before introducing new technical indicators into your trading system. 1) Am I Fully Actioning my Existing System? The primary motivation for adding a new indicator is often to improve the results of your current trading system. However, such improvements can only be measured if you have a well-defined system and are consistently trading it as designed.

A comprehensive system should at least include rules for entry, exit, and position sizing. Key Considerations: Are you faithfully following your current trading plan? Are you journaling your trades to track adherence and outcomes?

For many traders, the root issue lies in either an incomplete system or inconsistent execution. Honest self-assessment, backed by evidence from a trading journal, will help identify gaps in your current approach. Addressing these gaps should be your priority before adding another layer of complexity with a new indicator.

Action Steps: Review your trading journal to ensure you are consistently following your existing plan. Focus on refining your discipline and execution rather than prematurely seeking additional tools. 2) Is Adding Another Indicator the Most Impactful Change I Can Make Right Now to my trading? Improving your trading outcomes involves prioritizing actions that offer the highest potential for positive change.

While adding an indicator may seem appealing, there are other critical areas to address first: Trading Plan and Discipline: Ensure your existing plan is robust and that you are adhering to it consistently. Journaling: Regularly document your trades to provide a foundation for evaluating performance. Knowledge Development: Deepen your understanding of the indicators you already use.

Recognize what they reveal about market conditions and their limitations. Expanding your knowledge not only helps you maximize the effectiveness of your current tools but also enables you to make informed decisions about integrating new ones. In many cases, these priorities may outweigh the benefits of adding another indicator at this stage.

Action Steps: Evaluate whether enhancing your plan, discipline, or learning offers more immediate value than exploring new indicators. Commit time to mastering your existing tools before seeking additional complexity. 3) Do I Have Clarity on What any New Indicator Should Achieve? Before introducing a new indicator, you must clearly define its intended purpose.

Start by identifying whether your focus is on improving entries, exits, or another specific aspect of your trading system. Once you’ve pinpointed the objective, consider whether adjustments to your current indicators might achieve the same goal. Example: If you use a 10-period EMA as an exit signal but find it too sensitive to market noise, you could test a simple adjustment, such as switching to a 20-period EMA, before adding a new indicator.

Action Steps: Identify the specific gap in your system that a new indicator would address. Evaluate whether tweaking the parameters of your current tools could achieve the desired improvement. Test adjustments thoroughly before implementation. 4) Do I Have a Formal Testing Process in place for an evaluation of a New Indicator?

Introducing a new indicator requires a structured testing process to evaluate its impact on your trading outcomes. This process ensures that any changes to your system are based on evidence, not speculation. Testing Framework: Back-Test: Analyze past trades to determine how the new indicator would have influenced outcomes.

The goal is to justify the need for a forward test. Forward Test: Use a demo account to test the indicator in real-time market conditions. Maintain all other aspects of your trading plan to isolate the indicator’s impact.

Trading Plan Integration: If testing yields positive results, document how the indicator will be used within your trading plan. Be specific about its role and under what conditions it will be applied. Review Period: Set a timeline (e.g., three months) to assess the indicator’s performance and its contribution to your overall strategy.

Action Steps: Develop a clear and disciplined testing process. Specify the number of trades you consider sufficient for evaluating the indicator’s effectiveness. Regularly review and refine your approach based on test results.

Conclusion Adding new indicators to your trading system can undoubtedly enhance outcomes, but only when approached strategically. Before making changes, take the time to ask yourself these four critical questions: Am I fully utilizing my existing system? Is adding another indicator the most impactful change I can make right now?

Do I have clarity on what the new indicator should achieve? Do I have a formal testing process in place? By addressing these questions, you can ensure that any decision to incorporate a new indicator is well-informed and aligned with your broader trading goals.

Thoughtful preparation and disciplined execution will ultimately yield the best results for your trading journey.

The Parabolic SAR (Stop and Reverse) is a widely recognised technical indicator that has stood the test of time and is used by many trades to this day. First introduced by J. Welles Wilder in his 1978 book "New Concepts in Technical Trading Systems", the Parabolic SAR gained popularity as a trend-following tool due to its simplicity and visual appeal.

By plotting dots above or below the price, the indicator facilitates traders to identify potential reversal points in the market that can theoretically be used as the basis for long or short strategy entry points and, of course, for exit also. However, like any trading tool, it is worth emphasising that the Parabolic SAR works best when combined with other criteria and considerations and an understanding how it works is necessary prior to developing a trading strategy around this approach to trading reversals. This article explores how to effectively use it for entry and exit points, discusses its advantages and limitations, and introduces refined methods to improve its reliability.

What Is the Parabolic SAR? In simple terms, the Parabolic SAR is a price and time-based indicator designed to highlight potential trend reversals. Its dots appear: Below the price during an uptrend, indicating bullish conditions.

Above the price during a downtrend, indicating bearish conditions. As trends develop, the dots "accelerate" closer to the price, making the SAR more sensitive to price movements. This acceleration is driven by a so-called “ Acceleration Factor (AF)”, a parameter that increases as the trend continues.

Ultimately, and as a sign that a trend may be ending, the dots change from below to above and vice versa depending on trend direction. So, as with any strategy with trend following at its basis this indicator can be used in decision making for such strategies. Before we get into its actual use there are a few noteworthy benefits and limitations worth highlighting.

The chart example below (4-hourly gold CFD) shows the basic concept of SAR dot entry and exit for long and short trades respectively. Advantages of the Parabolic SAR The Parabolic SAR offers a few key benefits that can add to both its ease and method of use, these include: Visual Simplicity: Its dots provide an intuitive, easy-to-read representation of trend direction and potential reversals. Dynamic Trailing Stop: The SAR adapts to price movement, making it a useful tool for managing risk and locking in profits.

Trend Confirmation: It helps traders stay in trending markets by signalling when to hold positions or whether it may be worth considering exit. Versatility: Although originally designed for use on stock charts, calculation of the dots happens automatically irrespective of the chart you are applying it to, thus contributing to its popularity through adapting to any instrument (e.g. Forex, index or commodity CFDs) or timeframes.

Limitations of the Parabolic SAR Despite its advantages, the SAR has notable drawbacks: Choppy Market Signals: In ranging or sideways markets, the SAR often generates false signals, leading to unnecessary trades. Lagging Nature: While the SAR adapts over time, as with the majority of platform based indicators, it can lag during fast-moving trends, resulting in delayed exits. Lack of Context: The SAR does not consider market context, previous support and resistance levels, or external factors like news events.

Explanation of the Parabolic SAR Settings (PSAR) The two key default settings of Step (0.02) and Maximum Step (0.20) that you will see when you open the indicator on your trading platform, aim to strike a balance between sensitivity and stability. These settings are generally designed to work well in trending markets, and although we usually suggest that when first used, you use the default settings, you will discover in time there may be some benefit in adjustment for different trading styles or market conditions. As with all indicators used on your charts, you should not only understand what the indicator is telling you (and what it is not!), but also what settings indicate so that you may adjust to suit your particular trading style and objectives.

Understanding how these settings affect the indicator's responsiveness is key to optimising the potential use of this indicator. Step (Acceleration Factor): Default Value: 0.02 What It Does: The Step determines the rate at which the SAR dots accelerate toward the price as the trend progresses. Each time a new high (in an uptrend) or a new low (in a downtrend) is reached, the SAR calculation becomes more sensitive by increasing the Step value.

The Step starts at the initial value (e.g., 0.02) and increments by the same amount with every new extreme point in the trend. Impact: A smaller Step (e.g., 0.01) results in a slower acceleration, making the SAR less sensitive but more suitable for long-term trends. A larger Step (e.g., 0.03 or 0.05) increases sensitivity, making it more responsive but prone to false signals in choppy markets.

Maximum Step: Default Value: 0.20 What It Does: The Maximum Step is the cap for how far the Step value can increase during a trend. It ensures that the SAR does not become overly sensitive as the trend progresses, which would lead to premature reversals being signalled. Impact: A lower Maximum Step (e.g., 0.10) results in fewer reversals being signalled, making the SAR more stable in strong trends.

A higher Maximum Step (e.g., 0.30) increases sensitivity and may generate earlier exit signals but can also lead to more false positives. How These Settings Work Together The Step and Maximum Step settings control how quickly the SAR dots move closer to the price and how responsive the indicator is: At the start of a trend, the dots are further away from the price. As the trend strengthens, the Step increases, bringing the SAR dots closer to the price.

Once the Step reaches the Maximum Step, no further acceleration occurs, maintaining stability during extended trends. Examples of the Default Settings in Action Slow and Strong Trends With the default Step of 0.02 and Maximum Step of 0.20, the SAR is moderately sensitive: It allows the price some room to fluctuate without immediately signalling a reversal. This is ideal for trending markets where the price steadily moves in one direction.

Use a smaller Step (e.g., 0.01) and Maximum Step (e.g., 0.15) for smoother, less frequent signals that may suit swing or long-term traders. Short-Term, Volatile Markets If you increase the Step to 0.03 or 0.05, the SAR becomes more responsive (and so may suit scalpers or short-term traders): It adjusts faster to price changes, signalling reversals more quickly. However, this can lead to more false signals in sideways or choppy markets.

Use the Parabolic SAR for Entry Using the Parabolic SAR for entries is most effective when combined with other criteria to filter out false signals. Consider the following refined entry criteria: Dot Switching: Look for the SAR dot to switch from above the price to below (for a long entry) or from below to above (for a short entry). Candle Structure: For long entries, an entry candle close in the top 30% of its range, may suggest bullish momentum.

For short entries, an entry candle close in the bottom 30% of its range, may support bearish momentum may be developing. Sequence Length: Confirm that the previous SAR sequence lasted for at least 3 dots. This helps avoid signals caused by short-lived consolidations and retracements.

Volume Confirmation: Look for increasing volume during the breakout or reversal, which strengthens the likelihood of a genuine trend shift. Confluence with Additional Indicators: There may be some benefit in combining the SAR with complementary indicators such as the MACD. Look for MACD line crossovers to confirm the trend and increasing momentum as seen in the histogram bar length.

Proximity of previous key levels: Close proximity of previous resistance levels or swing highs above a potential long trade may be an indication that upside potential may be limited. Therefore, some caution in entry may be prudent, Obviously, the reverse is the case for short trades i.e. watch for close proximity of previous support or swing lows near short entry, Entry Criteria 2: Alternative approaches Although not commonly discussed, in an attempt to avoid the risk of a consolidating market with dots frequently switching above and below price there are a couple of additional approaches that may be worth consideration and testing. Using higher timeframe confirmation of trend: This could be using any presence of trend indicator e.g., a 4-hourly chart when trading an hourly timeframe, Using a breach of the price of the first dot of the previous sequence: This may suggest a move out of any potential sideways trend.

Let’s call this an “A dot” for this explanation. The chart example below (GBPJPY 30min) shows using the A-dot of previous SAR dot sequence a breach of which confirms move above potential sideways trend risk and potentially a higher probability trade opportunity (although lesser return) than standard approach. Exit Criteria: Using the SAR for Reversals The Parabolic SAR excels at signalling trend exits, especially when a trend reversal is imminent.

Here’s how to use it effectively for exits: Dot Switching: A dot switching to the opposite side of the price can serve as an early warning of a potential reversal. Additional Reversal Signs: These can be added to the basic dot switching described above. Candle Structure: Look for candle reversal patterns, such as engulfing candles, Doji formations, or pin bars.

Volume Drop: Declining volume near the end of a trend may signal that momentum is fading. Additionally, when the dots reverse there may be an increase in volume as the reversal is confirmed, Trailing Stop: Use the current SAR dot level as a trailing stop to lock in profits as the trend progresses. Summary The Parabolic SAR is a versatile and visually intuitive tool that can help traders identify trends, manage trades, and spot reversals.

However, it is most effective when combined with other criteria, such as candle structure, volume, and momentum indicators. If one invests time in measurement and testing then alternative settings can be explored that may better suit your desired trading objectives and strategy choice. Using alternative approaches as discussed above, may be also worth testing consideration, as well of course, its inclusion within a defined exit strategy.

As with any indicator, while the SAR alone is insufficient for making trading decisions, it has potential as part of a broader trading strategy. By understanding its strengths, limitations, and applications, traders can better harness the power of this classic indicator to navigate the complexities of the markets and instruments and timeframes of choice. We trust that this article not only adds to your knowledge and trading potential but would be delighted to welcome you to our live events where strategies such as this are discussed and demonstrated live in detail.

As we sit here and review the last weeks of 2024, it has dawned on us that 2024 was the year of wanting everything and getting nothing. Now that might sound like a ridiculous statement considering equities across the MSCI world are averaging double digit returns for 2024. In fact in the US they are on track for two consecutive years of 20% gains or more.

So we certainly gained something, but what we have come to realise is that 2024 was a year of anticipation and more anticipation and more anticipation but nothing being delivered particularly here in Australia. So let us put forward our reasoning. 1. RBA Rates – Pricing v the reality At the start of 2024 it's hard to believe that three rate cuts were fully priced into the cash right by December this year.

The pricing versus the reality facing the RBA in 2024 was one reason that we have probably seen muted movements in currencies and bond markets. We do need to commend the Reserve Bank of Australia (RBA) for navigating what has been a perplexing year in 2024. As mentioned, we start the year influenced by global central banks for multiple rates, driven in particular by the U.S.

Federal Reserve. However, by mid-year, pricing shifted so dramatically it moved through 189 basis points to be factoring in not one but up to four rate increases as inflation remained in a state of suspension as sticky components slow the rate of change and has seen underlying inflation holding at 3.5% and above. Despite this the RBA held rates steady throughout the year and has now adopted a dovish tone at its December meeting.

This is key – its 2024 cautious approach is seeing a 2025 pivotal shift and the board is now making it clear that its focus of managing inflation risks is starting to switch to addressing growth concerns. Market forecasting has easing beginning at the April meeting, the range from economists is February through to May 2025. Whenever it starts, the consensus between the market and the theoretical world is the same – one cut will bring several and come December 2025 the belief is the cash rate will be as low as 3.6%. 2.

Labour Market The other factor that has kept the RBA on the sidelines has been employment. IF we were to look at employment in isolation it should be championed. Underemployment, underutilisation and unemployment as a whole is – strong.

It has completely defied expectations in 2024, with employment levels reaching record highs and participation levels for the population and women in particular also at records. It should be noted that part of the reasoning for this is robust immigration, cautious corporate behaviour toward redundancies and then the big one public sector hiring. Surges in hires for education, healthcare, and hospitality, drove public sector resilience, offsetting weakness in private sectors like manufacturing, mining, and financial services.

What could force a change here is the 2025 Federal election – a minority government or even a change of government could lead to fiscal restraint and dampen employment growth, while a surprising downturn in job data could prompt the RBA to expedite rate cuts and increase the amount of cuts as well. Something traders will need to have their fingers on. 3. Record level Wage Growth Wage growth, a key concern earlier in the tightening cycle, moderated in 2024, easing pressure on policymakers both on the fiscal and monetary side.

At one point their wages were growing at levels not seen since record began. However, it did coincide with an inflation level of a similar rate meaning real wages were flat. Looking into 2025, wages remain a concern for rate watches for the following reasons: Minimum wage has consistently followed the inflation rate with a premium suggesting the will increase exceeding 3.5%.

Industrial relations reforms over the past 2 years have embedded wage rigidity. Finally accelerating wage increases in Enterprise Bargaining Agreements are now averaging 4%. Without corresponding productivity gains, these dynamics could challenge the RBA’s assumptions, complicating the path to rate cuts. 4.

Gravity defying markets Earnings multiples of the ASX 200 and its sector have soared in 2024. It’s a reflection of the optimism bordering on exuberance about peak interest rates and an imminent easing cycle. The forward P/E ratio of 17.9x is well above the 10-year average of 16.0x and significantly above its historical average of 14.2x.

Looking into 2025 – yes, these multiples are stretched, but when put into a global context it is understandable and even defendable. For example - Australian equities trade at a 21% discount to the S&P 500’s multiples and expectation for the US market in 2025 is one of further expansion. Thus to sustain these levels robust earnings growth are needed to close the P/E gap.

A 17.0x multiple down from 17.9, would meet expectations. 5. Banks being banks? One area that we note has not just defied expectations but also logic is Australian banks.

The banking sector was the standout performer in 2024. The sector outpaced the broader market by 25%, not hard when you look at CBA which has surged 40% in the past 12 months. It’s even more remarkable when you compare it to the material sector, it has outperformed its cycle peer by 50.2%.

The surge in passive investment flows (exchange traded funds and the like) which is growing at record levels, alongside superannuation sector contributions, fuelled this robust performance considering the Big 4 and Macquarie sit inside the top 20 and make up 45% of the ASX 20. However, this dominance is likely to face challenges in 2025. Key factors to watch include China’s commodity and economic outlook, shifts in risk asset performance, and potential regulatory scrutiny of superannuation’s ties to bank equity.

Coupled with stretched bordering in snapping valuations – the risks underscore the sector’s sensitivity to macroeconomic and policy developments going forward and overdone investment. 6. Iron Ore – heavy lifting Iron ore defied the forecasts in 2024. The expected collapse never truly eventuated, buoyed by cost-curve dynamics and stronger-than-expected demand in the latter half of the year.

Prices exceeded consensus estimates by upward of US$20 a tonne and provided a tailwind for materials. But, and it is a major but, China remains a pivotal factor. Broad-based policy stimulus announcements in late 2024 lifted sentiment, but execution and clarity remain uncertain.

China is looking to stimulate itself in 2025 and that will determine whether materials can close the performance gap with commodity prices in 2025. The other big unknown for Iron Ore – Trump 2.0 and his future tariffs on Australia’s largest trading partner. Signing off 2024 was a year defined by shifting dynamics across monetary policy, sector performance, and macroeconomic trends.

As we move into 2025, investors and traders will face a complex landscape shaped by earnings growth challenges, election-related uncertainties, and potential shifts in global economic momentum and policy. Successfully navigating these factors will come from understanding the macroeconomic signals and sector-specific opportunities they will present.

2024 – Where did that go? As we sit here and review the last weeks of 2024, it has dawned on us that 2024 was the year of wanting everything and getting nothing. Now that might sound like a ridiculous statement considering equities across the MSCI world are averaging double digit returns for 2024.

In fact in the US they are on track for two consecutive years of 20% gains or more. So we certainly gained something, but what we have come to the realisation is that 2024 was a year of anticipation and more anticipation and more anticipation but nothing being delivered particularly here in Australia. So let us put forward our reasoning. 1.

RBA Rates – Pricing v the reality The start of 2024 it's hard to believe that three rate cuts were fully priced in to the cash right by December this year. The pricing versus the reality facing the RBA in 2024 was one reason that we have probably seen muted movements in currencies and bond markets. We do need to commend the Reserve Bank of Australia (RBA) for navigating what has been a perplexing year in 2024.

As mentioned, we start the year influenced by global central banks for multiple rates, driven in particular by the U.S. Federal Reserve. However, by mid-year, pricing shifted so dramatically it moved through 189 basis points to be factoring in not one but up to four rate increases as inflation remained in a state of suspension as sticky components slow the rate of change and has seen underlying inflation holding at 3.5% and above.

Despite this the RBA held rates steady throughout the year and has now adopting a dovish tone at its December meeting. This is key – its 2024 cautious approach is seeing 2025 pivotal shift and the board is now making it clear that its focus of managing inflation risks is starting to switch to addressing growth concerns. Market forecasting has easing beginning at the April meeting, the range from economists is February through to May 2025.

Whenever it starts, the consensus between the market and the theorical world is the same – one cut will bring several and come December 2025 the belief is the cash rate will be as low as 3.6%. 2. Labour Market The other factor that has keep the RBA on the sidelines has been employment. IF we were to look at employment in isolation it should be championed.

Underemployment, underutilisation and unemployment as a whole is – strong. It has completely defied expectations in 2024, with employment levels reaching record highs and participation levels for the population and women in particular also at records. It should be noted that part of the reasoning for this is robust immigration, cautious corporate behaviour toward redundancies and then the big one public sector hiring.

Surges in hires for education, healthcare, and hospitality, drove public sector resilience, offsetting weakness in private sectors like manufacturing, mining, and financial services. What could force a change here is the 2025 Federal election – a minority government or even a change of government could lead to fiscal restraint and dampen employment growth, while a surprising downturn in job data could prompt the RBA to expedite rate cuts and increase the amount of cuts as well. Something traders will need to have their fingers on. 3.

Record level Wage Growth Wage growth, a key concern earlier in the tightening cycle, moderated in 2024, easing pressure on policymakers both on the fiscal and monetary side. At one point their wages were growing at levels not seen since record began. However, it did coincide with an inflation level of a similar rate meaning real wages were flat.

Looking into 2025, wages remain a concern for rate watches for the following reasons: Minimum wage has consistently follow the inflation rate with a premium suggesting the will increase exceeding 3.5%. Industrial relations reforms over the past 2 years have embedding wage rigidity. Finally accelerating wage increases in Enterprise Bargaining Agreements are now averaging 4%.

Without corresponding productivity gains, these dynamics could challenge the RBA’s assumptions, complicating the path to rate cuts. 4. Gravity defying markets Earnings multiples of the ASX 200 and its sector have soar in 2024. It’s a reflect of the optimism bordering on exuberance about peak interest rates and an imminent easing cycle.

The forward P/E ratio of 17.9x is well above the 10-year average of 16.0x and significantly above its historical average of 14.2x. Looking into 2025 – yes, these multiples are stretched, but when put into a global context it is understandable and even defendable. For example - Australian equities trade at a 21% discount to the S&P 500’s multiples and expectation for the US market in 2025 is one of further expansion.

Thus to sustain these levels robust earnings growth are needed to close the P/E gap. A 17.0x multiple down from 17.9, would meet expectations. 5. Banks being banks?

One area that we note has not just defy expectations but also logic is Australian banks. The banking sector was the standout performers in 2024. The sector outpaced the broader market by 25%, not hard when you look at CBA which has surge 40% in the past 12 month.

It’s even more remarkable when you compare it to the material sector, it has outperformed its cycle peer by 50.2%. The surge in passive investment flows (exchange traded funds and the like) which is growing at record levels, alongside superannuation sector contributions, fuelled this robust performance considering the Big 4 and Macquarie sit inside the top 20 and make up 45% of the ASX 20. However, this dominance is likely to face challenges in 2025.

Key factors to watch include China’s commodity and economic outlook, shifts in risk asset performance, and potential regulatory scrutiny of superannuation’s ties to bank equity. Couple this with stretched bordering in snapping valuations – the risks underscore the sector’s sensitivity to macroeconomic and policy developments going forward and overdone investment. 6. Iron Ore – heavy lifting Iron ore defied the forecasts in 2024.

The expected collapse never truly eventuated buoyed by cost-curve dynamics and stronger-than-expected demand in the latter half of the year. Prices exceeded consensus estimates by upward of US$20 a tonne and, provide a tailwind for materials. But and it is a major but China remains a pivotal factor.

Broad-based policy stimulus announcements in late 2024 lifted sentiment, but execution and clarity remain uncertain. China is looking to stimulate itself in 2025 and that will determine whether materials can close the performance gap with commodity prices in 2025. The other big unknown for Iron Ore – Trump 2.0 and his future tariffs on Australia’s largest trading partner.

Signing off 2024 was a year defined by shifting dynamics across monetary policy, sector performance, and macroeconomic trends. As we move into 2025, investors and traders will face a complex landscape shaped by earnings growth challenges, election-related uncertainties, and potential shifts in global economic momentum and policy. Successfully navigating these factors will come from understanding the macroeconomic signals and sector-specific opportunities they will present.

This article provides an in-depth analysis of potential market drivers, sector-specific performance expectations, global trends shaping the investment horizon for the year ahead, and amongst other factors, the potential impacts of a U.S. presidential transition. Within this analysis we will suggest what our provisional projection is and stocks that we think may benefit through 2025 and are perhaps worth some consideration providing of course they are a fit for your specific trading plan, personal objectives and financial situation, The Current State of Equity Markets Since the global pandemic and subsequent hyperinflation, equity markets have had a tumultuous few years, Add to that the continued influence of geopolitical tensions, many leading economists and arguably most market participant the reality is that al always, “the market, does what the market does” and as of late 2024, major indices such as the S&P 500 and the MSCI World Index are trading near record highs. In the U.S., the S&P 500 to date in 2024 is up a very impressive 26%, buoyed by continued earnings growth, the “artificial intelligence (AI) factor, and softening Federal Reserve, European equities lagged the US, but still gained with the FTSE hitting record highs in May and up around 8% year to date, and in Australia, an all-time high of 8514.50 in December of 2024, and showing a gain of close to 10% in 2024.

Resilience in the U.S. economy, a much “softer landing” (and avoidance of recession) than many had predicted in a high-interest rate environment, and very strong corporate earnings evidenced recently have all seen buying pressure predominate in stocks. There are potential headwinds looming, with some uncertainty obvious as we get close to the end of the year. Some central banks remain reluctant to cut rates (e.g.

The Reserve bank of Australia), and continued Chinese fiscal stimulus is perceived by markets to be a necessity rather than a luxury in terms of retaining a reasonable level of growth. Key Drivers for Equity Markets in 2025 Monetary Policy Shifts Central banks worldwide, particularly the Federal Reserve, will play a pivotal role in equity market performance. Further aggressive rate cuts in late 2025 could provide a tailwind for equities, particularly growth-oriented sectors such as technology.

We are still above the target inflation of 2-2.5%, which appears to perhaps be paused at this stage which means a cautious approach in the early part of year is likely. Inflation and Consumer Spending Moderating inflation, and so interest rates could enhance consumer purchasing power, boosting retail, travel, and leisure stocks. However, persistent wage pressures may challenge profit margins in certain industries.

Probably, the most unknown, and potentially most feared is that of the impact of potential import tariffs from the new Trump administration. These are seen as both inflationary, due to the impact on the cost of imported goods into the US, and may be likely to slow growth as a result of this and the indirect impact on potential rate cuts and subsequent cost of living impact on the US consumer. Corporate Earnings Earnings growth expectations for 2025 remain positively modest, but supportive of continued quarter on quarter growth through the year.

Current growth on last earnings forward guidance is suggested to be 5.7% for the 12 months ahead, with analysts projecting a 6-9% increase for S&P 500 companies for the year. The changing political environment in the US will obviously be influential, not only in terms of direct impact of policy e.g. the increase in oil production, but also the impact of persistent inflation on corporate lending, and consumer spending are all important. Geopolitical and Regulatory Factors Trade tensions, particularly between the U.S. and China, could impact sectors such as industrials and semiconductors.

We have already seen evidence of the latter in the last week. Additionally, environmental, social, and governance (ESG) regulations will influence investment flows in Europe as well in the US. The Middle-East conflict and the Russia-Ukraine situation, if persisting or even some escalation are all threats.

U.S. Presidential Transition With a potential change in the U.S. administration, pre-election suggestions of policy shifts in areas such as taxation, import tariffs, infrastructure spending, and a reduction in green energy initiatives could significantly impact sector performance. Dependent of course on whether we see follow through on that which was promised, and the timing of such will obviously be a key factor.

Sector Opportunities for 2025 Technology The technology sector is poised for continued growth, driven by advancements in artificial intelligence, cloud computing, and semiconductor demand. Companies like NVIDIA, Microsoft, and Tesla are leading innovation in generative AI and automation. Semiconductor stocks such as AMD and Taiwan Semiconductor Manufacturing Company (TSMC) are expected to benefit from rising chip demand.

Healthcare Aging populations in developed markets and innovation in biotech and pharmaceuticals present strong growth opportunities. Companies such as Johnson & Johnson, Moderna, and Illumina are well-positioned to capitalize on advancements in telemedicine and personalized medicine. Energy Transition Clean energy stocks are likely to benefit from government incentives and increasing global emphasis on reducing carbon emissions.

SolarEdge Technologies, First Solar, and Tesla stand out as potential winners. However, the Trump administration's rejection of evidence of global warming and a desire to support the more traditional carbon based energy sources may decrease potential growth in US based renewable energy stocks. Consumer Discretionary As inflation moderates, discretionary spending could rise, benefiting sectors such as travel, luxury goods, and e-commerce.

Companies like Amazon, Nike, and hotel and travel stocks e.g. Marriott International, are positioned to capitalize on these trends. Strong brand equity and innovation in customer experience will differentiate winners in this space.

Industrials and Defence With ongoing geopolitical tensions, defence spending is expected to remain elevated, benefiting aerospace and defence contractors such as Lockheed Martin, Raytheon Technologies, and Boeing. Infrastructure investments, if there is policy support for such, will also drive growth in construction and engineering firms, e.g. Caterpillar, who continue to produce excellent company reports.

Materials stocks Many resource stocks are global irrespective of the exchange (or often multi-exchange) they trade on e,g, BHP. There is no doubt that any slowdown in China is likely to impact demand for resources and influence manufacturing. Despite evidence of recent stimulus in the Chinese economy, many remain sceptical about the impact without further increases in such.

There is also little doubt that the “Trump Tariffs”, will impact, dependent of course as to the actual roll out of these, Although the cost of such will be worn by the US importer and not by the overseas company in simple terms, the indirect impact of potential need to drop prices to sell or looking elsewhere if local sources are not found may influence not only Chinese exports but also those companies who supply the raw materials to help make this happen. The impact on global materials stocks could be significant Global Trends and Regional Insights Europe Europe’s equity markets face headwinds from slow growth and energy dependency. However, opportunities exist in green energy and industrials, supported by the EU’s more aggressive green transition agenda than is the case in the US.

Companies such as Siemens and Vestas Wind Systems are well-positioned. Emerging Markets Emerging markets, particularly in Asia, hold long-term promise but face short-term risks from higher interest rates and currency depreciation. China’s reopening and policy stimulus could provide a boost, especially in consumer and technology sectors.

Alibaba and Tencent are expected to benefit from a domestic demand recovery. Australia Though corporate earnings have remained strong and the index hit record highs this month, there is a continued reluctance of the RBA to cut rates is now likely to extend well into 2025, with February at the earliest, and some even suggesting that Q2 is more likely, predicted amongst analysts, This does threaten growth in consumer discretionary stocks. The other potential headwind, as previously discussed, is the indirect impact of US tariffs imposed on China, not only in terms of demand for exported goods and so manufacturing, but on global commodity prices e.g., copper.

Hence the large materials sector may struggle at times dependent on the extent of these. Japan Japan’s markets have shown strength, driven by structural reforms and increased shareholder focus. Export-oriented industries, particularly automotive and robotics, are well-positioned for growth.

Companies like Toyota and Fanuc are strong contenders. The potential additional rise in Japanese interest rates which the market is expecting this month or January 2025 may impact not only on local stocks but could impact globally due to the carry trade implications, 10 Stocks to Watch in 2025 The following could benefit from some of the tailwinds discussed above, may outperform the market as a whole, and may prove resilient if the economy is not quite as robust as many think All of the following are tradable on GO Markets MT5 platform as Share CFDs. FIVE U.S.

Stocks: NVIDIA (NVDA): Leading advancements in AI and GPUs, NVIDIA remains at the forefront of technology innovation, poised to benefit from continued investment in generative AI. Microsoft (MSFT): Strong growth in cloud computing and AI-driven services ensures Microsoft’s leadership in technology. Tesla (TSLA): Beyond EVs, Tesla’s energy storage and clean energy initiatives position it for growth in multiple sectors.

The relationship between CEO Elon Musk and incoming President Donald Trump is not likely to do any harm to policy support of Tesla. Carnival Corp (CCL): With price back to levels not seen since the pandemic, an improving earnings and debt reduction story and the potential for consumer discretionary stocks to outperform should there be continued rate cuts later in 2025, this cruise stock could benefit. Caterpillar (CAT): Infrastructure investments, evidence of continued strong corporate performance and general industrial growth suggest Caterpillar could be a strong performer in the industrials sector.

FIVE ASX Stocks: Block Inc (SQ2.asx.): US company trading on the ASX who bought “Afterpay” to add to its global portfolio. Life 36) Inc. ( 360.asx ): Another US based company who also trades on the local market, This family app has shown strong growth and recent earnings support all-time highs on the stock, which continues to look positive into 2025. Deep Yellow (DYL): Uranium stocks have looked strong in the latter half of 2024 and despite the recent pullback followed by a price move higher, price seems to be “at value”, particularly with the increase in Japanese nuclear energy commitment and a global (ex-US) desire to move to decarbonisation.

DYL is well positioned to benefit from this during 2025. Webjet Travel Group (WEB): Webjet is a different entity to that which started 2024 with a split into two separate companies. Webjet travel group will benefit from increased consumer spending through 2025, which although may not happen significantly into at least Q2 2025, the company balance sheet is good and this stock looks as though it is well positioned at this current price to have a positive 2025 even if investors have to be patient initially.

Yancoal Australia Ltd (YAL): Operating five coal mines and managing five others across New South Wales, Queensland and Western Australia, YAL is potentially well placed in this sector to benefit in 2025. After reaching an all-time high this year, global coal demand is expected to remain as is, and so longer than expected, before a decline in 2026, according to the latest edition of the International Energy Agency's (IEA) annual coal market report. This would support a move higher during the coming months.

Particularly if we see a breach of July highs of $7.40. Summary: Navigating Equity Markets in 2025 The equity markets in 2025 will likely be shaped by a delicate balance of macroeconomic, sectoral, and geopolitical forces. Investors should remain agile and open to potentially quick changes in market sentiment and be prepared for some form of sector rotation throughout 2025.

The potential impacts of U.S. presidential policies add another layer of complexity, requiring vigilance and adaptability. Diversification across regions and industries, as well arguably similar diversification of approaches (i.e. some short-term, others medium-long term), may also be prudent, As always, our education through Inner circle and daily updates with charts of the day, could be a good place to be not only to be informed but also assist in assessing risk and opportunity throughout the coming year.

Trading is a skill that requires continuous development, self-assessment, and refinement. For traders aiming to achieve consistent profitability and long-term success, following a structured process can make the difference between stagnation and mastery. In this article, we’ll explore a systemized five-step process for trading development, designed to help you identify gaps, take ownership of your growth, and implement effective strategies.

Additionally we will discuss not only why traders avoid this approach (including a checklist) and what YOU can expect if you follow through on some of the methods used Why This Approach Is Often Overlooked While the systemized approach to trading development is logical and proven, it remains unpopular among many traders. This is largely because it requires introspection, effort, and patience—qualities that often take a backseat to the allure of quick fixes. Many traders fall into the trap of chasing the "next big strategy" or the "magic bullet" that promises instant success without the need for sustained effort.

Reasons Why Traders Avoid This Approach: - Impatience: The desire for immediate results often overshadows the commitment required for gradual improvement. - Overconfidence: Many traders believe they can succeed without addressing fundamental gaps, relying solely on luck or intuition. - Fear of Failure: Self-assessment can be uncomfortable and may reveal mistakes or shortcomings that traders prefer to ignore. - Lack of Awareness: Some traders simply don’t recognise the value of a structured development process or don’t know how to start. - Shiny Object Syndrome: The constant search for new strategies and tools distracts from the need to refine existing skills and processes. - Time Constraints: Trading development requires time and effort, which may seem daunting when balancing other commitments. Checklist: Are You Avoiding This Process? - [ ] Do you often jump to new strategies without fully mastering your current one? - [ ] Do you avoid reviewing your past trades and learning from mistakes? - [ ] Are you more focused on finding a winning indicator or strategy than improving your discipline and execution? - [ ] Do you feel uncomfortable facing your trading weaknesses? - [ ] Have you neglected setting clear goals and benchmarks for your trading? - [ ] Do you feel you lack the time to dedicate to structured development? If you checked any of the above, it’s worth reconsidering your approach.

A systematic process may seem less exciting, but it’s the cornerstone of long-term success. Your FIVE steps to trading development We have identified FIVE key areas of work to help you take your trading to the next level. Within each we have identified actions and suggested potential resources to help in your development journey.

Step 1: Benchmarking Gap Analysis Objective: Evaluate where you currently stand versus where you need to be in three key domains: technical skills, risk management, and psychological discipline. Steps: Assess Your Current Performance: Analyse your trade history, win/loss ratio, average return per trade, and consistency over time. Identify patterns in your trading (e.g., frequent stop-outs, giving too much back to the market on profitable trades, over-leveraging).

Define Your Ideal State: Identify those situations where you shouldn’t trade eg, when unwell, or routines you can put in place that will help you focus as soon as you look at your first chart of the day eg, realign with your trading plan. Specify what consistent profitability looks like for you. This might include metrics such as a 3:1 reward-to-risk ratio, an 80% adherence to your trading plan, or minimising emotional trades.

Conduct a Comparative Analysis: Pinpoint gaps in your knowledge, execution, or mindset. Ask yourself tough questions: Are you trading with discipline? Are your strategies well-tested?

Do you have a proper risk management plan? How to Achieve It: Use tools like trade journaling software, analytics platforms, or even manual spreadsheets to document and evaluate performance. Consider seeking out mentorship or coaching to gain an external perspective on areas for improvement.

Be honest with yourself. Acknowledging and owning areas of weaknesses is the first step toward progress. Step 2: Identification and Prioritization of the Gap Objective: Isolate the most critical gaps and prioritize them based on their impact on your results.

Actions: Categorize Your Gaps: Knowledge Gaps: Lack of understanding of market conditions, indicators, or trading strategies. Execution Gaps: Poor timing, impulsive decisions, or failing to follow your plan. Psychological Gaps: Fear of loss, overconfidence, or inability to manage stress.

Rank Gaps by Priority: Focus on the gaps that directly affect profitability or pose the highest risk to your account. For example, improper risk management may take precedence over optimizing your charting skills. How to Achieve It: Conduct a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) specific to your trading.

Use performance metrics to quantify the severity of each gap (e.g., how many trades are lost due to poor discipline?). Limit your focus to the top 2-3 gaps to avoid overwhelming yourself. Step 3: Ownership and Plan Clarity Objective: Develop a clear, actionable plan and commit to executing it with accountability.

Action: Create Specific Goals: Example: “Improve adherence to my trading plan from 80% to 90% over the next month.” Break Down the Plan: Define daily, weekly, and monthly tasks. For instance: Daily: Review and refine your watchlist. Weekly: Analyze trade outcomes and adjust strategies.

Monthly: Evaluate progress against set benchmarks. Identify Required Resources: Educational materials (books, courses, webinars). Tools (backtesting software, risk calculators, journaling platforms).

Support systems (accountability groups, mentors, or trading communities). How to Achieve It: Use SMART goals (Specific, Measurable, Achievable, Relevant, Time-bound) to structure your plan. Establish accountability through regular check-ins with a trading partner or coach.

Create visual reminders (e.g., a whiteboard or app) to keep your plan front and centre. Step 4: Learning and Development in Real-Time Objective: Apply your learning to live or simulated markets to reinforce skills and refine strategies – then take LIVE action. Actions: Using a Demo Account for new approaches: Practice executing trades under realistic market conditions without risking real capital.

Setting up a “ghost account” alongside your LIVE account which can be used to test new strategies or see the impact of scaling before you do it in practice (so you get psychologically ready for those bigger profit and loss numbers) Have set criteria for when you will transition to live trading to reduce the chance of procrastination for taking your next step. Use a Trade Journal: Record every trade with details such as entry/exit points, rationale, outcome, and emotions. Analyse trends over time to uncover recurring mistakes or successful behaviours.

Embrace Feedback: Treat mistakes as learning opportunities. Ask, “What went wrong, and how can I fix it?” Review your trades weekly to identify progress and areas requiring further improvement. How to Achieve It: Simulate market conditions closely aligned with your trading style (e.g., day trading or swing trading).

Join forums or groups where traders share insights and feedback. Commit to a growth mindset: mistakes are inevitable but invaluable for learning. Step 5: Testing, Implementation, and Refinement Objective: Measure your progress, refine your strategies, and ensure a continuous cycle of improvement.

Steps: Test Against Key Metrics: Evaluate progress using your ‘results barometer’ (e.g., profitability, win rate, risk management adherence). Close the measurement circle: Make data-driven decisions to tweak your strategies or execution plans. For instance, if a strategy has a low win rate, analyse whether the issue lies in the strategy itself or its implementation.

Create a Feedback Loop: Revisit Steps 1-4 periodically to ensure continuous alignment with your goals. How to Achieve It: Set milestones (e.g., quarterly reviews of your trading results). Use A/B testing for strategies to compare performance under different conditions.

Celebrate small wins to maintain motivation. So If I Do These Five Stages, What Can I Expect in My Trading Performance? By committing to these five stages, you can logically expect a transformational shift in your trading.

Systematic development not only addresses gaps in your skills but also enhances your confidence and decision-making abilities. Here are the key benefits and reasons why this is the primary driver for action: 1. Improved Consistency: - Following a structured approach reduces impulsive and emotional trading decisions, helping you stick to your plan. - With refined strategies and clear benchmarks, your results will become more predictable over time. 2.

Enhanced Risk Management: - Identifying gaps in your approach allows you to minimise unnecessary risks and protect your capital more effectively. - A systematic process ensures that every trade is backed by sound risk-reward calculations. 3. Data-Driven Decision Making: - Regular review and analysis of your trades ensure that you’re making informed decisions based on evidence rather than guesswork. Commit the principle of “evidence based trading” to everything you do from here, 4.

Increased Confidence: - Knowing that you have addressed weaknesses and built a solid foundation instills greater confidence in your trades. - This confidence helps you remain calm and disciplined, even in volatile markets. 5. Continuous Growth: - The feedback loop ensures that you’re always learning and adapting to changing market conditions. - This adaptability is crucial for staying competitive in the long term. Ultimately, it is an unavoidable fact that the primary driver for taking action lies in the fact that trading success is not about finding shortcuts but about building sustainable habits and systems.

By embracing this process, you’ll not only give yourself a chance to improve your results but also develop the resilience and mindset required to thrive as a trader. Summary Trading is not a one-time skill but a lifelong journey of learning and adaptation. Through following this five-step systemized process, you can take greater control of your development, systematically address your weaknesses, and build on your strengths.

Success in trading doesn’t come from luck but from deliberate effort, discipline, and continuous refinement. Take the first step today, and remember: the best traders are always students of the market. And finally, we are here to help.

Our regular education sessions and videos are there to guide you, offering detailed explanation and clarity about many of the things covered in this article.