The Patterns In Trading

Remember History – because the market repeats itself in cycles . The past market cycles are an identifiable pattern of rises and falls. The stock market has a long data trail and we can use the data to our advantage.

NB That’s not to say you shouldn’t use stop losses on individual speculative stocks – you absolutely should – just that selling your entire portfolio in a down market isn’t wise.

For the first two months of 2011, Swing Trading has really been outstanding. Everyone says “Now is the time to get in”, “Don’t miss the upswing”, and “You’ve gotta get into the game”.

1) Every new candlestick will have an opening value. And this opening value means the starting point of how this partially candlestick going to be form.

My focus has been in 3 areas: Market Timing, Money Management and Equity Selection. Market Timing is critical. Income Averaging and guessing bottoms are not credible strategies. It makes no sense to buy long when the market is declining. Equally, to expect equity to drop no further is like believing in Santa Clause.

I developed an innumerable number of trading systems. They would work well with one stock or index, but not others. They would work well over one period of time, but not others. Each system depended on a number of parameters such as the length of various moving averages or the number of standard deviations required for an entry or exit. Finding the unique set of parameters is called optimization.

Too hedge your portfolio or speculate against doomsday in the markets you can place a trade that tracks the price of the nearest dated monthly contract. Alternatively you can place an open market order for a contract month in the future. If a contract expires not in profit it is possible to let it roll over into the next month. There is a cost associated with rolling over the contract so it’s worth considering placing a market order at a point where you think that the price will carry on moving in a profitable direction.

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