Markets and Direction
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Because markets are dynamic, you need to be able to adapt to current
conditions. As a general prepares for battle, you need to select
the correct strategy for your war between the bulls and the bears.
Your enemy doesn't always fight using the same battle plan. You
need to be flexible and ready to change when conditions do.
Remember, the selection of trading strategy depends on the kind of
trader you are, your time frame, and your own individual personality.
It is important to understand that every trading strategy
depends on the overall trend direction, strength, and duration of
the markets. The two most important markets to you as a trader are
the S&P 500 and the Nasdaq. If your trading vehicle is in the Nasdaq,
you need to know the direction of that market. I have known traders
to focus solely on the S&P 500. This is a mistake because the Nasdaq
and the S&P 500 behave differently at times. Before you begin to
make an individual trading decision, you need to establish what is
taking place in both markets. If you are trading Internet stocks, you
need to know what the Internet index is doing, as many times Internet
stocks are driven by pure speculation. In a case like this, you
need to know what the Internet index is doing. The S&P 500 and the
Nasdaq could be going down while the Internet index is going up.
No matter which markets you trade, you need to establish the overall
market trend.
Because markets are dynamic, you need to be able to adapt to current
conditions. As a general prepares for battle, you need to select
the correct strategy for your war between the bulls and the bears.
Your enemy doesn't always fight using the same battle plan. You
need to be flexible and ready to change when conditions do.
Remember, the selection of trading strategy depends on the kind of
trader you are, your time frame, and your own individual personality.
It is important to understand that every trading strategy
depends on the overall trend direction, strength, and duration of
the markets. The two most important markets to you as a trader are
the S&P 500 and the Nasdaq. If your trading vehicle is in the Nasdaq,
you need to know the direction of that market. I have known traders
to focus solely on the S&P 500. This is a mistake because the Nasdaq
and the S&P 500 behave differently at times. Before you begin to
make an individual trading decision, you need to establish what is
taking place in both markets. If you are trading Internet stocks, you
need to know what the Internet index is doing, as many times Internet
stocks are driven by pure speculation. In a case like this, you
need to know what the Internet index is doing. The S&P 500 and the
Nasdaq could be going down while the Internet index is going up.
No matter which markets you trade, you need to establish the overall
market trend.