Opening Position
February 2010
More often than not, after a really strong rally, you will notice the momentum slow down and the markets transition from rally mode to a trading range. It is during times like these when the bulls and bears pause, undecided as to who will take control. What is interesting — and you have probably noticed it — is that any smidgen of bad news will make the bears shine because they think they have won the battle, whereas any bit of good news will shift the spotlight on the bulls, and they will do the same. But these moves are very short-lived, unlike those found during bull or bear rallies, making it easier to fall into a trap.
In these types of markets, it is helpful to identify support and resistance levels. Fortunately, they are quite obvious when they occur, making them simple tools from which traders can benefit. It is an ideal environment for swing trading. The challenge, of course, is to identify the beginning and end of that price swing.
In our feature article this month, “The 350 Swing Trade” by Barbara Star, we learn about an indicator that can help you do just that. Star points out that swing trading “offers a good middle ground that makes trading more manageable,” and she could not have said it any better. Implementing an automated trading system like the one discussed in this article will help you gain the consistency you need in your trading results.
However, that’s not to say that a discretionary system will not work. As you will find out from Toni Hansen, our interview subject of the month, it is possible to gain consistency in your trading results by following a simple discretionary system. It is also interesting to find out that she feels she owes her success to being able to share her trades with others.
There is no right or wrong way to trade. It’s your personality that will determine what type of trading is best for you. So take a moment right now to get to know yourself and identify what sets you apart from others. Whether you implement an automated trading system, a discretionary method, or anything else, what is important is that you have a trading plan that you adhere to. That is the only way you will see consistency in your trading results.
Jayanthi Gopalakrishnan, Editor