| Posted in PREPARING FOR THE MARKET DAY | Posted on
Success depends on overall market strength or weakness and how well positions capitalize on the
changing environment. Individual entries can act against sentiment and yield good profits, but over
time, the odds for success decrease when positions do not track movement in the larger indices and
market cycles. Swing trading produces better results when riding the wave and not drowning in it.
Markets tend to correct for many months at a time. But most participants focus on relatively brief
periods of strong upside momentum where they hope to pocket big gains. Unfortunately these
exciting times also awaken greed and weaken risk management. Participants violate personal rules,
chase dangerous positions, and develop an unhealthy sense of invulnerability. They also forget that
the momo environment will disappear quickly and without warning.
Strategies that work well in hot markets destroy trading accounts during cool ones. Most players
carry a long-side momentum bias into topping markets and corrections. This triggers inappropriate
positions, leads to missed opportunities, and empties the same pockets that filled so easily during
parabolic rallies. Avoid this common trap as experience grows. Learn to read the broader market
and adapt quickly to changing conditions. Build personal cycle measurements that bypass the
financial press and stock board chatter. Use common sense to anticipate and test new profit
strategies that the crowd may never see.
Combine market sentiment and Pattern Cycles to locate the best opportunities of the moment. Broad
forces align well with different setups on individual stocks. First gauge current conditions and then
decide what types of trades will work best in that environment. Make certain that strategies
correspond to the same time frame as the analysis. When major indices converge, trade the same
phase as their current Pattern Cycle whenever possible. When they don’t, choose positions that
support general sentiment and current risk. Use S/R barriers on both stocks and broader indices to
time profitable exits.
Swing traders must sell short as easily as they go long. This challenges the investor bias that most
neophytes carry into modern markets. Many participants still don’t understand many aspects of this
classic trading practice. The financial establishment discouraged retail customers from learning
about short sales for many years. The uptick rule made entry difficult, while Wall Street told
practitioners that they were hurting the American economy so that they could keep this profitable
strategy for themselves. Times have changed. Direct access execution systems now allow short sale
entry as quickly as long positions. Learn to use them without delay.
Pattern Cycles require a broad range of execution strategies in both directions. Be prepared to adapt
quickly to changes in market sentiment by learning simple ways to recognize new broad-scale
conditions. All sincere efforts will be greatly rewarded. The easiest trades always come early in a
trend before the crowd notices them. Profit from momentum markets, but don’t fall in love with
them. Increased risk always follows increased reward. Work to broaden execution skills and learn to
trade anything that offers a good opportunity. Market players who hit many singles will last longer
than those who knock a few home runs but strike out the rest of the time. Be consistent and make a
good living through both up and down trends.
changing environment. Individual entries can act against sentiment and yield good profits, but over
time, the odds for success decrease when positions do not track movement in the larger indices and
market cycles. Swing trading produces better results when riding the wave and not drowning in it.
Markets tend to correct for many months at a time. But most participants focus on relatively brief
periods of strong upside momentum where they hope to pocket big gains. Unfortunately these
exciting times also awaken greed and weaken risk management. Participants violate personal rules,
chase dangerous positions, and develop an unhealthy sense of invulnerability. They also forget that
the momo environment will disappear quickly and without warning.
Strategies that work well in hot markets destroy trading accounts during cool ones. Most players
carry a long-side momentum bias into topping markets and corrections. This triggers inappropriate
positions, leads to missed opportunities, and empties the same pockets that filled so easily during
parabolic rallies. Avoid this common trap as experience grows. Learn to read the broader market
and adapt quickly to changing conditions. Build personal cycle measurements that bypass the
financial press and stock board chatter. Use common sense to anticipate and test new profit
strategies that the crowd may never see.
Combine market sentiment and Pattern Cycles to locate the best opportunities of the moment. Broad
forces align well with different setups on individual stocks. First gauge current conditions and then
decide what types of trades will work best in that environment. Make certain that strategies
correspond to the same time frame as the analysis. When major indices converge, trade the same
phase as their current Pattern Cycle whenever possible. When they don’t, choose positions that
support general sentiment and current risk. Use S/R barriers on both stocks and broader indices to
time profitable exits.
Swing traders must sell short as easily as they go long. This challenges the investor bias that most
neophytes carry into modern markets. Many participants still don’t understand many aspects of this
classic trading practice. The financial establishment discouraged retail customers from learning
about short sales for many years. The uptick rule made entry difficult, while Wall Street told
practitioners that they were hurting the American economy so that they could keep this profitable
strategy for themselves. Times have changed. Direct access execution systems now allow short sale
entry as quickly as long positions. Learn to use them without delay.
Pattern Cycles require a broad range of execution strategies in both directions. Be prepared to adapt
quickly to changes in market sentiment by learning simple ways to recognize new broad-scale
conditions. All sincere efforts will be greatly rewarded. The easiest trades always come early in a
trend before the crowd notices them. Profit from momentum markets, but don’t fall in love with
them. Increased risk always follows increased reward. Work to broaden execution skills and learn to
trade anything that offers a good opportunity. Market players who hit many singles will last longer
than those who knock a few home runs but strike out the rest of the time. Be consistent and make a
good living through both up and down trends.
