The Daily Note - $DJIA $SPX $NDX - Should You Stay or Should You Go

Tweet *****It's almost the end of May and the markets are getting nervous. So why the question if the May/Away in the markets keeps holding true. The question becomes more burning if you are still expecting profits and see the drop-off potential of the market. Certainly it looks threatening if we look at it myopically but if if we look at farther out patterns it is merely a blip on this mountain trek.

 Embarking on any climb it's good to know where and how high we are able and willing to go before turning back and generally speaking, the higher the climb the more people we need to support us. The danger comes if we are not prepared to stay longer and we insist on doing it anyway, because the higher we go the more likely a storm and colder temperatures. Also, if we attempt a Himalayan hike we better carry oxygen and enough supplies. It is where we need the most preparation and be able to keep good judgement about the possibility of inclement weather and certain death.

Traders who jump in at these lofty altitudes are the ones most likely to jump out too early and most likely to regret it. Also those who can't make up their minds may meander around looking for a better path while the weather is closing in on them. It behooves a trader to keep wits about them and therefore more crucial to have target and stops set just in case they lose their direction. Quick action can be a life saver if you know where it will lead and it is why in trading we need to know our escape path.

For a climber  daily/hourly  assessment of weather conditions is also crucial for our survival and likewise for a trader who wants to collect profits before a major turn of events.

So knowing some history, current events and basic facts becomes our survivor's almanac where past notes of trades and behaviors will help asses the possible future, be it short or longer term. Watching what others do may be a good indicator, but asking them what to do could lead to disaster. Knowing your own limitations on this climb is the better strategy and turning back early may be a survivor's tool rather than dishonor.  The key here is not to be complacent but be involved with your own finances.



Happy Trading, Living and Dancing
Anni

 The Daily Pick -$DJIA $SPX $NDX


 ©DayTrading with Anni 2007 - 2013 All Rights Reserved

The Daily Note - $DJIA $SPX $NDX - Taking a Chance on Tops and Bottoms

Tweet ***** I've spoken about taking chances before and here once again when the markets seem to be topping it's those that take chances get rewarded; or so it seems.

Not everyone does well chasing tops or grabbing bottoms; my trading style is different yet I certainly admire those who do and do it well.  Trading tops and bottoms requires a certain stamina and a certain daring. More often than not, the market can turn against your direction rather quickly so taking profits too is a challenge and the style can become a scalping game.

The major challenge in this style  is to figure the top or the bottom of a direction, which in itself is a major study. Knowing your charts is crucial in any trade, but recognizing tops and bottoms requires mastering it.  It is not to say that you will not get it correct many times, but it takes years of  observation too, to see it unfold. Then also, when the time is right, the question becomes whether to take that chance and risk the loss if you're not correct because as I said, chancing a reversal has more probability of being wrong for the time being.

I say time being because as we go higher like in the Dow30 (DJIA) or the S&P500 (SPX) we do not know how high is high enough for most traders & investors. Being exact is difficult even with excellent charting because we only know that somewhere it will top and reverse, for short or longer term. First consensus has to be reached which for day traders one day is enough and for trend traders a longer term is needed and preferred, but in either case your conviction is tested.

Stamina is required to stay with the flow of a trade even if you are on the "right side" but your conviction gets tested each time a trade turns against your direction and when your only "comfort" is having a set stop.  Loss in any trade is painful but, in order to get those big winners on a direction reverse, traders have to take them and minimize them.

Where you set your stop is how you will manage most of these trades, as limiting loss is crucial and more wrong trades than right trades can turn into major losses if not managed well.  So if you have the stamina, the daring and are able to manage your loss well, this may be a style you prefer and remember that chances are only given to those who take them.



Happy Trading, Living and Dancing
Anni

The Daily Pick - $DJIA $SPX $NDX

©DayTrading with Anni 2007 - 2013 All Rights Reserved

The Daily Note - $DJIA $SPX $NDX Tuesday Update, Nothing More

Tweet *****Seems to me that everyone's waiting; and you know what happens when everyone's waiting, Nothing; and I have nothing more to say.... for now.



Happy Trading, Living and Dancing
Anni

The Daily Pick - $DJIA $SPX $NDX


 ©DayTrading with Anni 2007 - 2013 All Rights Reserved