prepared investor is making money from 2500 to 4700 levels
| From : Zafar at 09:27 PM - Jun 13, 2009 ( ) |
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The best traders can adjust to whatever the markets throw at them. Rather than focus on what they think or expect to happen, they plan for multiple scenarios and adjust as the opportunities present themselves. As a trader, it is important to not lock yourself into only one possible outcome, as the markets are not always rational or logical. Fear and greed are two of the most powerful emotions we have as humans. If you think of the markets as a huge pool of extreme emotions, than you can understand why the markets often move in ways we would deem improbable or illogical. A stock chart shows price objectively, but traders in turn must be objective in reading them.
Even when the market is in a strongly trending environment, it is still good practice to run through alternate scenarios so that you are not caught by surprise in the event of a reversal. This becomes even more important when the markets are at inflection points that could be resolved in either direction, much like where we find the current market. The current rally has pushed the indexes to resistance levels that may be difficult to overcome, but they also have yet to show clear signs that the rally is over. This is a tricky spot to trade in, as traders should always honor the trend, but we must also be cognizant of support or resistance levels. There are many different ways to trade in this environment, but one simple tactic is to always have a list of strong and weak stocks at your disposal. This way if something dramatic happens due to an unexpected event (not uncommon nowadays), then you don't need to scramble to take subpar setups or find yourself liquidating perfectly valid long setups because you were unprepared.
