Thursday, September 13, 2012

Onwards and upwards

It seems like the markets have navigated the slew of major announcements over the last few days with no disruption to the uptrend in the general indices. While some commentators or bloggers were calling the 'top' a few days ago, we resolutely stuck to our plan of trading the trend. As it happens, it would seem that was the correct thing to do.

The absolute worst thing that could happen to us is that the markets would reverse, our stops on our existing long positions in stocks would be hit, and we would bank our profits. Trend followers never predict the top or bottom in any market, we wait for our own trailing stops (per the system rules) to be hit. We do not try and be 'clever' and outsmart the market. We simply wait for the market to show its hand (i.e. its trend) and then we follow. The clue is in the name...

Going forwards, the plan is always the same - stay in existing positions until such point in time when you get a signal that the trend is over.

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