Jesse Livermore, an investment wizard declares, “There is only one side to the stock market; and it is not the bull side or the bear side, but the right side.”After giving the jolt of recession, the market is showing signs to recoup its original health. It seems to tell the investors—forget the past and get ready for a bright future. A shrewd investor has begun to see good opportunities for swing trading relating to both the long and short sides of the market. Do not get enmeshed with the barriers of bull and bear, and be concerned with the practical ground realities, watch and study the changes that are happening every day. It is possible to trade without clinging on to the traditional trend philosophy and do it by the results of your homework.
Stock Trading without a trend is an attainable reality in the present circumstances. Before embarking upon this idea consider the following factors.
- What is your goal and limit for the earnings?
- What amount you are willing to invest? Naturally, this will have the direct bearing on your income. The more you invest, the higher are the chances of your profit or vice versa.
- Any investment involves risk. Investments done during the uncertain times bear more risks. Are you prepared to face such an eventuality?
- You need to be an astute individual to track the trend correctly, and decode about the entry and exit points. The five syllables in these two words will build or break you.
- This is the ideal time to increase your theory knowledge. Read literature on stocks, discuss with other investors, and tackle information available in reliable sources. Make it a point to attend the general body meetings of the companies and seminars on financial topics.
- If you can afford, go for the latest software on investment strategies, provided you know how to interpret the statistical tables and charts in them.
- When you try to catch the trend, you need not trade on day to day basis. You can hold the position for a month or so or for longer duration, say 3-6 months.
- Do not ever think that the individual who sits before the computer for long hours is the most intelligent one. You can decide your business strategy in an hour or less.
- The one thing that you need to be in total control in trading without a trend is your emotions. Invite all suggestions, think over them but do not succumb to temptations.
- Trading without a trend does not mean that you develop a carefree approach and trade on the basis of your whims and fancies. Stick to your style, trade with discipline and be guided by your money management techniques. The difference is that this is a special time in the market, strange developments are happening, and market is trying to adjust to post a bright posture from the darkness of recession. You have more opportunities, both short term and long term.
- Never lose sight of the protective stops. In trading without a trend, this is an important safeguard one must take.
- Along with the genuine investors, the market is also crowded with speculators, the Big Fish that try to swallow the Small Fish. The markets all over the world are affected by many events/variables and at times it seems that nothing will work. Stop at such critical junctures and take a break, instead of doing trades in a confused state of mind. Such trades mostly lead to losses.
Your attempt to in share trade at a time when there are no firm trends will most probably land you in a wrong spot. Whether you have the adequate back-up to stand firm and proceed further is the moot question. Be mentally prepared for the eventuality that the market will disobey your finest plans of stock trades.