Are you asking for trouble if you're long in today's markets?

[darkhorse70]

As the title suggests, is it foolish to go long in a market like this. That is assuming if you belive the markets are over due for a correction. I feel conflicted as I believe the correction is around the corner however I have some stocks which I believe have great long potential. The dilemma is you dont want to stand out on the side lines because of a bias opinion and miss oppurtunities however I find it disturbing to think that your risk is hard to define when the markets could go into a selling frenzy. To me the photo I attatched could be some type of market sell off confirmation to come. Surviving in this game is the number one goal but you also dont want to miss oppurtunities. Any thoughts or advice? Thanks in advance

 

[darkhorse70]

Re: are you asking for trouble if you are long in todays markets?

My trading time frame is flexible but will mainly be more focused on holding positions for days/weeks. My concern is the stop loss is hammered and you cant get out any where close to where you planned.

 

[darkhorse70]

By the way the photo was of the dow industrials weekky time frame

 

[Wysiwyg]

If you want an opinion on "a" trend line well daily and weekly Dow was supported on Friday. If this trend line breaks in the near future I will be bearish.

 

[pixel]

Re: are you asking for trouble if you are long in todays markets?

My trading time frame is flexible but will mainly be more focused on holding positions for days/weeks. My concern is the stop loss is hammered and you cant get out any where close to where you planned.

Just my worth:

Any index, be it Dow, DAX, or AllOrds, is an average of a multitude of shares with a multitude of individual agendas, trends, and prospects. That implies, if the portents for the next move of the index point towards increasing risks of a correction, some shares will indeed get hammered, some may remain steady, while others can still rise.

Therefore, I wouldn't ask "is it foolish to go long" because the answer will still depend on the individual stock and the time frame. Conversely, even in the most Bullish of Bull Markets, it may well be foolish to buy a stock that is failing to follow the rising trend of the average.

Example: In the later part of 2007, my analyses of nearly every market suggested a sharp correction would be due. So, I culled my portfolio quite vigorously, selling every position that I felt was vulnerable. However, I did hold on to a few that I thought would weather the storm and even prosper. Then I took a long holiday.
Turned out, some of my holdings did prosper. A few did not, so in hindsight I might have judged the decision to hold as "foolish". But even throughout 2008 did I manage to trade profitably by simply shortening my trading time frames and trading shorter swings for smaller profit margins and very much tighter stops.

 

[darkhorse70]

Thanks wys. Unfortunately my home computer has crashed so I have to go to my dads work today or tomorrow to get a look at my charts. Either way I still feel like the indexs are close to or pushing their boundaries and any day could be its last. But my opinion really doesnt matter. Its more so what the charts are saying.

Thanks pixel. I forgot to mention im only looking at three specific stocks atm which are twitter,facebook and tesla. They have all had a good run besides twitter having a massive correction. To me they look 'over extended' or over valued. I have no clue about fundamentals etc so I could be very wrong but they look like speculative stocks thats why im just abit worried if there were to be some correction that the stocks could drop 30/40%. The problem is im most likely going to have 10k to trade with and no diversifcation, just all in on one stock so im extra nervous.

Most books ive read regarding successful traders, most were lucky and started out riding a bull market. Giving them enough time to learn. Haha I dont know if ill be so lucky.

You want to make sure your decision is the right one and not an emotional one, thats why I asked the question.


Thanks again guys

 

[pixel]

... forgot to mention:
Daryl Guppy's book on "Bear Trading" has helped me a lot - especially in the Dot.Bomb days when I was still riding my bike with training wheels attached.
ISBN 1 875857 82 6

 

[tech/a]

For a CRASH there needs to be a strong fundamental reason.
There are plenty around but are any of them due to raise their ugly head at this point?

Are there any other nations who are going to default.
Is the US going to stop Q/E?

Is there another round of Credit Default swaps going pear shaped?

I doubt a CRASH is imminent.

 

[darkhorse70]

Thanks pixel, ill add that to my list of books I have to put to order.

Tech my main factors are intereat rates, QE, debt the government holds, the amount of years the bull runs gone on for, all time highs in the US markets. If not a crash atleast some sort of correction. The US economy is so weak imo, how would it ever recover if something does go wrong. These are just my opinions, but I dont have much knowledge on economics etc. Those factors are enought to scare me haha.

 

[Julia]

For a CRASH there needs to be a strong fundamental reason.
There are plenty around but are any of them due to raise their ugly head at this point?

Are there any other nations who are going to default.
Is the US going to stop Q/E?

Is there another round of Credit Default swaps going pear shaped?

I doubt a CRASH is imminent.

Seems your inner masochist is coming out, Tech!

But when I see people thinking and even accusing us of Ego's
That's when "Why Bother" rings out load and clear.

dh, starting to get the reality of the difference between your paper trading and using real money now?
You seem somewhat reluctant to air that expertise when it comes to putting actual dollars into the market.

 

[tech/a]

Seems your inner masochist is coming out, Tech!


dh, starting to get the reality of the difference between your paper trading and using real money now?
You seem somewhat reluctant to air that expertise when it comes to putting actual dollars into the market.

All good Julia

I'm wearing a helmet!
and Sumo suit!

Looks ridiculous

 

[darkhorse70]

Haha julia, its not about losing the money. Its about trading correctly hence why I asked how others would approach the situation. If I had 10g right now which I dont ill put it on. Ill make a diary of my trades end of august hopefully. Live trading.

 

[5oclock]

... forgot to mention:
Daryl Guppy's book on "Bear Trading" has helped me a lot - especially in the Dot.Bomb days when I was still riding my bike with training wheels attached.
ISBN 1 875857 82 6

Gday PIXEL, any stand out parts of "Bear Trading" for you , or not??? i do have the book and have read it--but now you mentioned it maybe a reread wouldnt hurt.....anyhow any particular chapter you found useful ??

 

[pinkboy]

Haha julia, its not about losing the money. Its about trading correctly hence why I asked how others would approach the situation. If I had 10g right now which I dont ill put it on. Ill make a diary of my trades end of august hopefully. Live trading.

Put $1 where your mouth is. Lets call the $$$ for brokerage your 'entry fee' to live trading.

See how hard you try to preserve that $1, and Ill bet your brokerage you will watch it like a hawk. Much different attitude to 'paper'.


pinkboy

 

[darkhorse70]

Pinkboy, well obviously theres phycological factors which are hard to break. Never said there wasnt. I try to treat paper trading like the real deal. Obviously its not easy as that. Id rather spend my money losing it on the markets then go to clubs, by drugs or alcohol etc. I have like 5 t shirts. If I lose money ill be upset because I failed trading not because my money is gone. That is for 10k. If I lost a mill id go berzerk hahaha. But this games a risk.

I was very obsessive in my last paper trade simulators. I would constantly refresh the page. Be manic depressive. I realised that intra day trading would drive me mad. Now ill find a very good set up then trade it and not interfere. Maybe not even look at the charts for days. I only want to look at the charts when some price action has some significance. I dont want to be some trading addict who is so obsessed with money. Just find a good oppurtunity, take it and dont interfere to much. Set your stop loss and maybe move it up as you go. Let the trade actually run.

 

[CanOz]

DH, most technical traders would use some kind of index filter that would tell them when its time to look for shorts rather than longs. You either be a technical trader and use something that's tested over time, so that you apply the same logic each time...or use your macro fundy knowledge to switch your bias and make your plays accordingly...

 

[pinkboy]

No matter how much you paper trade, no matter how much you treat it as real $$$, trading real $$$ is another level - trust me.

You can never push yourself as hard in training, as much as you can make yourself hurt by racing and racing hard.

I dont even look at the dollar figure of my parcels of shares. I only really concern myself with percentages coloum. That way, I never care to know the real dollar figure positive or negative. All I see are percentages. That way, I only see the hurt or the glory in a relative figure, not a formative one. (Even though Commsec does all the working out for you and its there plain as day to see).


pinkboy

 

[pixel]

No matter how much you paper trade, no matter how much you treat it as real $$$, trading real $$$ is another level - trust me.

You can never push yourself as hard in training, as much as you can make yourself hurt by racing and racing hard.

I dont even look at the dollar figure of my parcels of shares. I only really concern myself with percentages coloum. That way, I never care to know the real dollar figure positive or negative. All I see are percentages. That way, I only see the hurt or the glory in a relative figure, not a formative one. (Even though Commsec does all the working out for you and its there plain as day to see).


pinkboy

Amen to that, pb;

When I started paper-trading, I could easily hold through the predetermined pullback and still have the discipline to sell when the trailing stop level was hit. It was also quite easy to assess those cases where a stop had become counter-productive, even implement the experience gained and build it into a refined trading method.
After about three months and better than 80% running winners, it seemed time to put the plan into practice.

At the first Tax Return, I almost broke even!

Why? It's easy to remain cool when only paper money is riding on it. A completely different story when you think of all the beautiful money down the drain of a pullback. So you feel tempted to fudge - either by stopping out too early, then missing the train, or by staying in too late "just another day" and the loss suddenly doubles. Likewise, when in profit: Do you have the nerve to leave a Grand at risk and sell into an Intraday pullback, when the tried and proven Plan says "wait for the Close"?

It wasn't until after I got the psychology of trading under control that I came close to the theoretical performance that I know my plan could deliver. And even now, after decades of trading, occasional stuff-ups are still happening.

 

[darkhorse70]

Canoz, any examples of the index filters? haha pinkboy and pixel I agree with you. haha damn human weaknesses. I was just thinking how do i take my profits. What is the best mathematical way to increase longevity at least. My point being there is always some thing stressing you in trading. luckily ive been seeing a physiologist for my anxiety and maybe i can blend the strategies shes taught me to help me detach myself emotionally from trading haha.

 

[pixel]

Canoz, any examples of the index filters? haha pinkboy and pixel I agree with you. haha damn human weaknesses. I was just thinking how do i take my profits. What is the best mathematical way to increase longevity at least. My point being there is always some thing stressing you in trading. luckily ive been seeing a physiologist for my anxiety and maybe i can blend the strategies shes taught me to help me detach myself emotionally from trading haha.

I am using essentially the same type of chart template for all kinds of analysis. A trend is a trend, whether applied to an index, exchange rate, or stock. Equally, the odds of a breakout or breakdown are calculated by the same formula; only the parameters change, depending on time frames and personal risk tolerance.

By way of example, let's look at a weekly chart of the ASX 200, aka XJO:



For about a year, the momentum (MACD) has been under a Divergence cloud, which led me increasingly to tighten stops, particularly on vulnerable Longs. Doesn't mean I entered Panic Stations. Quite obviously, XJO kept finding support at the rising trendline, and the red/yellow breakdown arrows have so far been followed by a green/blue All Clear arrow. (In 2007/08, that came to an abrupt end.)

A switch to Monthly draws some parallels and highlights similarities and, so far, differences:



While the Bearish Divergence lines can be compared, momentum has not yet dropped away as sharply as it did 7 years ago; but neither has it crossed above that line, suggesting the threat is over. Let's see how things play out.