Chapter 1
Challenges to Conventional Trading and Investing
In this opening chapter I will explore some of the common issues faced by conventional traders and we will begin to discover the vibratrading difference and advantage.
Directional vs. Non-Directional Methodology
By far, the most popular trading approach is directional. This requires a trader to make a bet on the future direction of price. We see this approach used heavily in scalping, day, and swing trading, and especially in instruments offering medium to high leverage such as Foreign Exchange (FOREX), commodity futures, CFDs, and options. If price moves favorably, all is well. Problems surface any time price moves adversely, resulting in capital erosion by the amount risked on each trade. Therefore, to avoid blowing out the entire account, a directional trader must ensure that the system is profitable indefinitely, or until the trader decides to cease all trading activities. If a trader fails to maintain this ongoing condition of consistent profitability, all trading will eventually come to an end, without any means of extracting further profits without injecting new capital. Furthermore, once the trading account's drawdown (percentage between the equity peak and the trough during a specific period) is over fifty percent, recovery is extremely difficult. If trading is allowed to continue, it is very likely that all capital will be depleted in the process.
To overcome this, many traders resort to non-directional strategies ...
