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.