Sunday, June 10, 2012

Don't say I didn't tell you...

As mentioned in a recent blog post here, there have been political manouverings over the last week, culminating in the Spanish government obtaining a bailout for its banks last night. Next weekend we have the re-run of the Greek elections, whoch potentially has major consequences for the Eurozone, and the markets themselves. This has all resulted in increased volatility and a bounce in the general markets - again, this is one reason why I tend to shy away from trading the indices themselves, but rather concentrate on trends in stocks.

I also stated that the psychological aspect of trend following will be tested, and from speaking to other traders this has indeed been the case. The 'giving back' of a portion of profits is all part of the game from a trend following point of view. From here, will the markets carry on upwards, or will will downtrend re-assert itself? All you need do is control the controllable (refer this post) - your own positions, your risk and your emotions and let market do what it wants.

The US indices are close to reverting to a neutral position, however the FTSE has acted the strongest over the last week - the drop in Chinese interest rates boosted mining stocks, of which the FTSE has a number. The DAX is still weaker, and remains on a short signal:

Regardless of this, if you were short individual stocks over the preceding few weeks you should have made some nice profits. I have posted several recent examples of nice trends - there are plenty more from where those came from. If you haven't made money, then get yourself a copy of my e-book or book some 1-2-1 training and find out what trend followers would have been looking for, and see what profits you could have made.

From here, the markets will do one of three things - go up, go down, or go nowhere. Volatility will remain high so remember to either embrace it or stand to one side. Trend followers will have no emotion, and will put to one side their own political beliefs about what they (personally) want to happen, or even what they THINK will happen - we will simply follow price action, wait for any signals and act accordingly.

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