The market must be reaching an important juncture...
by, 2nd-July-2009 at 12:33 PM (863 Views)
...otherwise there won't be so many threads on what why how TA or FA works or doesn't work. It's quite clear (to me anyway) that self doubts are creeping in when people suddenly realise they are not winning, or not winning that easily any more. And they react with their old habit of asking the most basic and fundamental question of whether the "tool" they have chosen is still working or not...
Most people find it hard to accept the market moves in ebb and flow, the low is never far away behind a high... and that its impossible for a market to remain at a "high" all the time because without a market low there wouldn't be any opportunity to "buy low", and without a market high, there wouldn't be any opportunity for those who have "bought low" earlier to "sell high" to lock in their profit. This observation is actually quite obvious and simple and yet surprisingly not many can "see" it and make full use of the opportunity provided.
The time to go long is at a market low. The time to go short (or do nuthin' if you are a one-way streeter) is at a market top... but if you are not sure, wait for the market to show you it's in a low or at a high. But until then, it's no point trying to "force" it, or force yourself, or force a change in your belief or in your tool.
The market has reached a critical juncture both TA and FA wise. It needs time to digest the confluence of data before deciding if it will continue its rise or make a retreat. This is the "thinking" behind the big money and the market movers. For small fries? The best thing they can do is to wait for the big fellas make their moves first. There's no need to "rush".
Be patient... and time will tell. Be flexible and adaptive to allow yourself to "flow" with the big fellas, it's no point fighting them. Be perceptive of the change and if you can exercise your common sense - believe in yourself and your own observation.
While I wait, here are some interesting reads, it may help or may not help, it all depends on your attitude. If you want proof, there's none. But if you are willing to understand (and accept) what is described and adapt or incorporate the idea into your trading, who knows, it might work for you too.
Exploit your competitive advantages
Dialing down the aggression
Moving aggressively in financials and real estate
ps: if you find this post damn patronising, it is, and my apology here coz I am reacting badly to those silly discussions on whether what works or what doesn't... I am sure they know there's a search facility provided in this forum.Risk control
Before I go any further, the primary objective of the proactive strategies that I offer is risk control. Without risk control, the returns of the strategies we use could never be realized. Please review my performance for details. The only reason our strategies perform as well as they do is that we focus on controlling our risk first.
Instead of chasing performance, we consider performance to be a natural byproduct of risk control. Though my effort in this is difficult, I am trying to coin the phrase "chasing risk control" for my clients. If we are able to control our risk at all times, we are able to realize opportunities when they surface. However, if we relinquish risk controls we may identify opportunities, but be handcuffed in losing positions when it comes time to act.
Interestingly, the strategy that I am proposing is not something that should only be used at select times. We can use it in any market environment, regardless of economic conditions, it works on both the long and short sides of the curve, and I have developed a way to do it without sacrificing time or lifestyle.
This strategy has a set of rules. The most general of these rules are as follows:
- Risk controls must be used at all times
- Keep it simple
- Use the market to guide decisions
- Use market-based ETFs to take advantage of oscillation cycles...