Now we're getting down to the skinny on trading. This section will show you the basic set ups that I'm looking for when trading. I'll put in other sections to keep the snapshots from piling up.
The set ups are the same in all markets - up, down, or sideways. As the "Option Addict" Jeff Kohler always says - "I don't think of it as a Stock Market, but rather a market of stocks". This means that even though the overall market might be going up, you are always going to find individual stocks going down, and vice versa.
Let's get down to the very basics here:
When a stock is bullish (i.e. going up) it will have higher highs and higher lows.
When a stock is bearish (i.e. going down) it will have lower highs and lower lows.
The top graph is bullish - notice the green circles showing the higher highs and higher lows.
The bottom graph is bearish - notice the green circles showing the lower highs and lower lows.
This may seem basic, but it's a CRUCIAL STEP. Countless traders have lost fortunes by not understanding this concept. You must ALWAYS know what your current trend is - are you in a bullish trend or bearish trend??
The next part deals with trends...
No comments:
Post a Comment