Ride the Waves, they break, they run, and then they subside

‘Your beliefs become your thoughts, your thoughts become your words, your words become your actions, your actions become your habits, your habits become your values, your values become your destiny’ Mark Isaacs – Kabul Peace House.

Many of our views on life are reflected in our behaviour and in turn our trading approach and skills. Market trends are a common market characteristic that challenge us, beat us up, provoke us, reward us and are also relatable too many aspects of life and nature, not the least of which is my oft used analogy of trading the ‘wave’.

We can assimilate our behaviours with natural events, and we can challenge ourselves to achieve greatness. But to be driven by money loses the reason we live which is to be happy, content and fulfilled. Money is a by-product of the journey so as we develop and fine tune our trading skills, we need to satisfy the things that matter most and drive us toward satisfaction. I will leave you to decide what is important to you but if you let those reasons be your driving force you will in all likelihood succeed in anything you do.

Price analysis in our ‘stock market’ world aligns with the notion of behavioural analysis and if we analyse markets with that focus we come to understand more clearly how and why they behave that way. As long as humans drive markets that will never change. The computer or algorithm can beat the human (Kasparov still won vs. Deep Blue 4-2) (an average algorithm trade is 24 seconds!) but the human and the computer will always beat the computer. The difference being imagination which computers don’t have. I recently wrote an article titled the Miracle of Thought – the Power of our Imagination. See blog. The explanation is supported by four amazing charts that us remind us as to why we look for trends – because anything can happen and often does – if we let it. We have a very powerful market tool in our hands which is all driven by the combined power of our minds. Capturing them is the challenge we all have.

Trends and New Highs are the two price behaviours I focus on, and that doesn’t discount other highly useful price behaviours that give us the edge of probabilities. In this article I want to talk about the trends and how they develop and why, what I look for, and how I capitalise on them? My strategy is focused, process driven and based on probabilities and in this imperfect world we always need to money manage our trades to limit risk. I encourage you all to adopt your own tone and style of trading, I simply provide a template and basis for learning at Stockradar.  Experiment, test, challenge, question and develop. This is a very satisfying approach and when complimented by a disciplined approach it can yield great results. We are all different. That’s why there are always traders/investors buying, and some selling.

I am not a long-term thematic analyst so I prefer to always be protected from downward thrusts and try to capitalise on impulse moves higher that may occur within longer term trend phases. Sometimes these endure for years and sometimes only months and within this process we have a nil tolerance for large drawdowns or losses. I hate them don’t take them. The Stockradar strategy is solid with imperfections but I can accept that because the probabilities always play out and generate positive returns. The Stockradar portfolio approach shows how to leverage the Stock Picks and it has generated excellent long term returns that have endured all types of markets such as the GFC and as a part of that are the down periods.

Trends take on all shapes and sizes but the prevalence of them in an ever-changing world is a constant we can always capitalise on. Looking at prices through realistic eyes, a structured process of observation, and authenticated techniques, helps guide us to generate consistency in our trading and subsequently our equity growth. The recent bull market phase that has taken us back to the all-time market high’s basis the ASX/200 but has been narrowly based compared to the broad-based rally of 2003/06. That ended badly but we survived and back then cash was a good alternative as cash rates were nearer 8%.

Markets phases differ and we have to accept that rather than try and make things happen. What’s ahead is always a surprise so rather than forecast or predict anything I deal with what we have and if a defined trend emerges, I follow it until told otherwise, Stockradar aims to identify trends and I demonstrate on the website how I approach them and profit from them. They all come from different comers of the market and often areas we may not expect however they are what they are, and we accept the trends without question. Often I find price ‘perceptions’ are well ahead of sentiment. This occurs when the right price action signs emerge amid fearful sentiment. Worry and doubt never got us anywhere as market traders.

Take the bull by the horns have faith in your system
and the ride the waves with confidence.