Last week I was lulled into thinking that sledding was going to be fairly easy relatively speaking compared to last year when I was still early in honing my trading skills. Then I got a bit over confident and broke one of my prime rules in waiting for the market to tell me what the trend is through reactions at support/resistance trend lines and jumped in feeling pretty sure of what the market would do.
Turns out that was a big “Nope!” as the market proceeded to ignore my plans an move to its own beat which was not on my expectations list. This is a common trap for all traders – jumping in ahead of an anticipated market move, only to have the market do the opposite.
Two areas that can be trap prone are at near term market tops or bottoms. Market Makers know traders are trying to step in early so there will be numerous false signals to lure in folks, only to have them stopped out of positions. However during this time, the cycling/chop can be extreme- which means serious profit potential for those able to sync up with all the zig-zags.
It took me most of the week to figure out the flow of market gyrations since there were no large scale moves- just lots of chop with a slow and steady grind higher. By the time I figured it out and recalibrated my analysis, there wasn’t much to do except watch and see if the market will confirm my assessment.
Had one closing trade this week for a loss as the market moved higher than I had planned. The sad part is the overall trade was profitable at one point after being in the red, but I didn’t close thinking the top was in- my mistake which cost me.
The good news is this was an excellent week to get in the weeds of sharpening my scalping trading skills which should prove to be a great asset in getting future market profits. Lots of chop and false moves for analysis. It was also a good lesson in being patient- easily one of the most important aspects in raising the odds for a profitable trade or investment.
The market showed clear signs of topping action so a pullback appears to be imminent. Based on what I’ve seen, I wouldn’t be surprised if next week started with a gap down.
In other news, there were big market moves with earnings reports coming out. Google, Netflix, and Amazon soared to new heights while Apple’s stock value dived even though they beat estimates. This is why I always stress never to fall in love with a stock. There are people who bought Apple at $700 thinking it was a short time away from $1000, only to see it drop over 35% since those highs. It’s almost where it was a year ago before the parabolic rise- so those who didn’t take profits during the past year have given back almost all the gains.
And you have people still trying to preach the virtues of “buy and hold”.
Recent Comments