It's unfortunate how aspiring traders believe the markets continue in any direction perpetually or as it may seem -- changes its direction -- opposite what the trader thinks when a position is taken. The first point for anyone considering the stock market as a business opportunity is to realize it cares as much about its participants as the lake does about those who don its shores enjoying all it has to offer.
Much like the surfer who knows when the best times are to surf the waves or stay by the shore so should the trader view the markets. Spotting trends in the market is as simple as understanding its unique characteristic to move in waves whether up or down. Traders who make money consistently have learned to ride the trend until it reaches a climax where it bends or fails to continue making higher highs and higher lows -- in the case of an uptrend. Trying to pick tops or bottoms is the practice of the hopeful amateur who hasn't learned how futile this effort can be. Like the surfer, the trader doesn't need to define where or when the climax will come what matters most is enjoying the ride for as long as it lasts.
The market goes wherever it wants notwithstanding the hopes and desires of its participants. It, however, is governed by certain laws somewhat like gravity reaching points and retracing back to other points. This movement is what causes discernible patterns traders use to capitalize from -- activity which develops into recognizable trends. Effective traders monitor trending activity in multiple time frames using longer time frames as the most dominant and shorter time frames to catch movements occurring contrary to the longer term trend. Developing the belief around the reliability of this practice is necessary to realize significant results in your trading experience.
There is a psychology involved with how trends are manufactured. Since Bulls make money while prices increase and Bears make their money when prices decline -- each have an agenda to affect the movement of prices favorably. Previous highs serve as resistance levels and Bulls gain confidence as these are exceeded. On the other hand Bears see previous lows as support and are encouraged when prices exceed these levels. The battle for control of market prices ensue creating waves of action in one direction or another. Traders are objective and are neither Bull or Bear. They are simply opportunists who determine who is in control of the market and simply go with that crowd as long as it is in control of price action. Traders capitalize by going with the flow without prejudice and easily abandon positions when it becomes evident the crowd has lost its strength.
Its amazing how one person's loss creates another person's gain. This is the reality of any market. Money is gained simply because someone else put it there and it's wise to never buck the trend. You will inevitably realize this as one of the most costly mistakes you could ever make.
Al White has written an e-Book "Trade the Trend" and you can get your FREE copy here: http://www.Wealth-Building-Mentor.com
Learning Meditation Or Watching
No comments:
Post a Comment