Saturday, May 04, 2013

Staying on the right side of the market

Yesterday we saw the Dow crack the 15,000 level on an intra-day basis. The Nasdaq has led this new move upwards (charts of both are below) over the last few sessions. Yet again, those calling for a top in the markets have got their fingers burnt.

"Being wrong is acceptable. Staying wrong is totally unacceptable" - Mark Minervini, from his Stock Market Wizards interview.

Trend followers will never be on the wrong side of a market when a trend takes off. By definition, their systems will detect the potential start of such a price movement. There will be no trying to be smart, by attempting to pick an exit point and to 'time' to end of the trend. They will wait for the price action to tell them, in the same way that the price action told them when to get in.

During non-trending phases, yes you will have losses as potential trades and trends fail, but that's part of the game. It's a cost of doing business. But that's when sensible risk control minimises your losses.

Over the last two or three weeks, I have had a few trades quickly fail, but the losses incurred have been minimal. However those trades in which a trend has taken off have more than covered those losses - my best performing position is currently approaching the 10R profit level.

All this means that, even with being lightly invested, the returns generated since July hit the +150% level yesterday.

To learn more on how I do this, and how I can help you achieve similar performance, refer to my e-book, or the 1-2-1 training or mentoring services I provide.

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