Frustrated By Trading?
The Dynamic Wealth Report
June 2, 2010
by Justin Bennett, Editor
The recent market volatility has been a curse to some… and a blessing to
others.
Investors have seen a big hit to their portfolios over the last few
weeks. Just a month ago they were riding a wave of upward momentum in
the markets.
But many were ignoring the warning signs of a large correction…
Technicals and fundamentals were way out of whack. Yet investors seemed
convinced the markets were on a one-way trip to the all-time highs.
Much to their dismay, they’re now realizing just how fragile the current
market environment is…
But investors aren’t the only ones. Many short-term traders are having a
tough time in the recent action as well. Buying the intraday dip worked
for months on end. But recently this setup is getting crushed.
With all the recent volatility, many traders and investors are left
scratching their heads.
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You bet. Some traders are gobbling up this volatility. They love the big
moves… the bigger the moves, the bigger the profits.
What’s the difference between them and someone watching their account
dwindle with each passing day?
You may think they have some great trading secret nobody else knows…
Well, in a way you’re right. They do have a secret others don’t realize. But it’s not what you think.
They don’t have some special indicator promising them huge profits. They
don’t have access to secret knowledge about certain stocks.
So what is it? How are some making money while others are losing their
shirts?
It comes down to your attitude about the markets…
More specifically, it has to do with being open to changes in market
conditions. This is the secret others don’t realize. The best traders
have the ability to adapt to different market conditions. And one thing
is for certain…
Market conditions have changed dramatically.
It wasn’t long ago the market was an unstoppable upward force. Buy the
pullback and sit back and relax. But those days are over…
No longer can you expect the market to trudge higher day after day. No
longer can you expect to buy the intraday pullback and walk away with a
fist-full of profits.
But what you can expect is markets to be volatile.
They can turn on a dime and run hundreds of points. You just have to be
there to catch those turns. And of course, control your downside risk
when you do it.
How can you catch these turns? One way is to use support and resistance
zones. (I’ve talked about these in past articles.) Control your losses
when you’re wrong. Let your profits run as far as possible and sell
when the markets tell you to.
You see, the markets are constantly changing…
And this means you have to be flexible. You have to be willing to adjust
your trading style. If you don’t, you’ll get left in the dust.
The challenge of course is being able to realize when market conditions
change. And what adjustments to make…
And that’s where experience comes in. I won’t kid you by saying you can
figure it out with a couple days of practice. It takes commitment to
your craft.
Here’s the bottom line…
Don’t expect market conditions to conform to your trading style. Be open
to changes in market conditions. Adjust your trading or investing style
to fall in line with changing market conditions.
You have to be able to “roll with the punches”…
If you’re unwilling to change, you may be trading a trend following
system in a market that’s not trending. Or maybe you’re trading a
breakout strategy in markets where breakouts don’t perform well.
It’s just like life… the ones willing to adapt are the ones who survive.
• Copper (Under $3.10 a pound)
The industrial metal is reacting to recent news out of China. Manu-facturing activity dropped in May while property sales were down in
a number of important cities. Manufacturing is still expanding but looks
to be slowing. Copper prices have fallen from the recent highs of $3.60
a pound.
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