Hello traders everywhere! Adam Hewison here, co-founder of MarketClub with your mid-day market update for Friday, the 21st of October.
As we are coming to the end of the trading week I want you to ask yourself this question: IS PERSONAL COACHING RIGHT FOR ME?
Watch my free personal invitation to you about one-on-one coaching:
How to avoid Slice-O-Matic markets
One of the biggest challenges many traders face is avoiding "Slice-O-Matic" markets. What is a "Slice-O-Matic" market? Well, it's a market that lacks any real direction. We can call these markets "Slice-O-Matic" markets as they cut trader's equity into ever smaller pieces.
For the past seven days, the S&P 500 has not closed in any one direction from more than one day. This is the choppy scenario that many traders would like to avoid.
So how is that done?
One of the simplest ways that I know is to use our Trade Triangle technology. The major Trade Triangle to watch trading stocks is the monthly Trade Triangle, as this determines the trend. We use the weekly Trade Triangles for timing purposes. Let me give you an example, if the last monthly Trade Triangle is green, this indicates the major trend is up for that stock. You would then use the initial monthly Trade Triangle as an entry point and the weekly red Trade Triangle as an exit point. You would only reenter a long position if and when a green weekly Trade Triangle reappeared, providing the monthly green Triangle is still in place. You would again use the next weekly red Trade Triangle as an exit point.
The reverse is true if a red monthly Trade Triangle shows that the trend is down. You would then use the weekly green Trade Triangles for covering short positions and the weekly red Trade Triangles for reentering short positions.
When you have two opposing Trade Triangles, like the red monthly Triangle and green weekly Triangle in the S&P 500, it indicates that you should be on the sidelines and in cash. You would be amazed at just how well this simple formula works in the stock market.
So there you have it, a simple, easy way to protect your equity and avoid Slice-O-Matic markets.
Now, let's go to the 6 major markets we track every day and see how we can create and maintain your wealth in 2011. Continue reading "How To Avoid Slice-O-Matic Markets"