Saturday, June 1, 2013

Last few weeks

Last 2 weeks have been the best trading weeks of the year for me so far, only one reason for it - trading with the trend. 

Cant get any simpler than that. I've tried to catch so many falling knives in bonds,  there have been times where I've thought to myself - "bonds cant sell off unless I'm long!" ha ha. Counter trend trading is a bitch, and very bad for your trading account.

Any new trader goes through the problem of having a bias about the right "price" for the market. As if he/she knows whats too high or too low. So they short when the market goes up, because obviously its "too high" and has to drop, right? WRONG! The price is what it is, and price is going higher or lower, and our job, is to be with that direction. Even if you have a crystal ball to call market tops, first verify it by confirming a change of trend in price to the downside.

The main questions anyone should be asking before putting on a trade is:
  • Is there a trend?
  • In what direction is the trend?

Thats it! If there's a trend, and you know what direction it is in, you should be in it. If price is too extended, buy pullbacks. 

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