Live to Trade Another Day!

Posted on September 09, 2010

Don't be a Frustrated Trader, be a Profitable one!

We have been saying for over two months now that we need the market to make up its mind before putting on any trades. Since the last update we have had even more proof that our plan is paying off. While other traders are losing money and getting frustrated we are sitting on the sideline just waiting to put our money to work. It is very important to preserve capital so that we have money to trade future setups. Furthermore it is very important not to get frustrated over losses so when the high odds setup occur we are not sitting out because we are tired of losing money to the market. The above mentioned anxious traders are in jeopardy because of those exact things. They are going long, then short, then long, then short finally giving up and subsequently missing out when the real move comes. Here at Stock-Market-Strategy we skip all those low odds trades in order to stay strong and professional. Trading is a business and not a hobby. We trade to make money, not to get excitement out of it! By looking at the chart you can see how the market turned out just as we predicted it would. The market is in a channel as it is consolidating before either breaking out or down. There is nothing wrong in trading the channel but the problem is many traders do not realize that it is a channel until too late. They trade the channel the same way as they trade a trending market. In a channel the market shows signs of trend just as it turns around at resistance or support. Trader's indicators such as MACD and Moving Averages are lagging meaning that when price bounces from support to resistance the indicators starts giving trend trading signals. The problem is, the price has already reached the top of the channel and will now turn down. So price is already heading down when the long signal is given by the indicators. A channel should be traded by buying support and selling resistance. You fade the moves. The chart clearly shows these points where moves should have been faded. [caption id="attachment_708" align="aligncenter" width="300"]SP-500 Trading Range example Click image to view chart analysis[/caption] At Stock-Market-Strategy we are trend-traders so we are not buying or selling this trading channel. We have a plan that we follow in order to make sure the odds are in our favor so as soon we saw evidence two months ago that the market was likely to be rangebound we advised our members to wait until we saw evidence of a breakout or breakdown. First our members wanted trades as other advisors called trades but they quickly realized that we were advising right thing therefore helping them preserve their capital and spared them the frustration of losing money. We promise you that your patience will pay off! The market will make up its mind and when it does we will be there to make sure that our members are positioned to take advantage of the opportunities that will arise.