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Don’t Push When You Can Pull!

It would be nice if the market would post a sign and tell us where it’s headed, but if that were the case then trading wouldn’t be so lucrative when we’re right. Good trading doesn’t have to be about nailing every move, contrary to what many believe.

Rather, letting the market pick a direction and then jumping on for a ride can be a very effective approach simply by limiting our mistakes [1].

Often times we find the market to be range-bound or lacking momentum (such as right now ahead of the Labor Day holiday). During such times, it’s extremely important not to force trades [2] in an effort to anticipate the start of a meaningful move. The drifty price action found within those trading ranges makes it extra difficult to gauge momentum, so making shorter-term trades with tighter stops and narrower objectives for targets is a necessary approach during such times.

Heads Up

Have you ever pushed on a door expecting it to open, failing to notice the “Pull” sign posted right in front of you? Had you only been paying attention, it could have been so much easier. 😀

Similarly, trading requires the same awareness on our part. Keeping our heads up and taking notice of any changes in the landscape which may serve as clues goes a long way toward avoiding blunders. If we don’t stay sharp and pay close enough attention to formulate an opinion [3], we’ll never catch those clues.

If you’re pushing when you should be pulling, recognize the difficulty you’re facing with your trading and change your approach. There’s a reason why that trade you’re fighting right now isn’t cooperating with you – and it isn’t that you’re unlucky or hard to get along with!

You’re trading against a headwind of some sort, and the sooner you recognize it, the sooner you can move on to a trade that offers you some real potential.

Even if you’re a contrarian, wait for those signals and confirmation that it’s time to act. Trading is easiest with the wind at your back, so don’t fight it!

Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com [4]

[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]