30 Oct Perspective in Trading
One thing is for sure in the stock market, you never know what will happen. You just have to prepare, plan and execute. Unfortunately we are people and we have emotions and sometimes those feelings get in the way of rational thought. If you follow the tape too close you can get caught up in the game of anticipation, this can cause you dearly. Anticipating in the stock market can be very dangerous, if you think an earnings report is going to be great and you buy a lot of stock just before earnings you may lose a significant portion of your investment overnight. Because no one really knows whats going to happen. Its the same with anticipating moves day to day, if you get caught up too much in the minutia of 5 minute charts you will literally make a mountain out of a mole hill. Pullbacks are very healthy in uptrends, they keep the cycle moving along, you need to breathe as you run.
In this current uptrend we are much further along much faster than many anticipated, there that anticipation thing is again, since our flash crash low we tested that low and its been straight up ever since. So what if you thought that we were going to top out at the top of that low consolidation? You would have missed out on a fantastic move that so far hasnt lost any steam. The market has low distribution day counts on S&P and the Nasdaq, the low days have been in lower volume than the updays and the higher volume down days were immediately turned around the next day, thats a great sign!
So while we all anticipate we have to remember that in the end we just need to read what is happening on the right side of the chart. Let the tape tell you what to do and have the perspective of an eagle rather than a person.