Wednesday, March 01, 2017

Finding Star Trades When the Market Seems Dark

Thanks to Bella at SMB for the posts on key takeaways and inspirations from my recent seminar at Traders Expo.  I think Bella has gotten it right:  those are key points worth taking away.  I strongly recommend reviewing his posts.

I'd like to underscore the point about first understanding the regime we're trading in and only then figuring out which setups are associated with positive expected returns.  Here is a recent post on the topic.  

If the regime has not changed, the patterns that have shown up recently should replay themselves in the immediate future.  The recent regime has told us loudly and clearly to buy dips.  That regime will eventually change, but it is not helpful to try to front run that change when there is no current evidence that the regime has shifted.

The astronomer does not fret that the sky is dark.  That permits a gaze at the stars.

This has been a totally neglected topic within technical analysis and trading psychology.