Those that remember the T.W.i.T acronym (Trade with Trend) almost always end up long-term winners in the stock market. These traders know which direction the tide is flowing and is smart enough to only trade in that direction. This advice was was mentioned in the classic trading book “Trading For A Living” by Dr. Alexander Elder in his Triple Screen Strategy. Perspective is key.
Another simpler explanation of how to keep the markets in perspective was made popular in an oldie but a goody, “Secrets For Profiting In Bull and Bear Markets” by Stan Weinstein.
In it, he simply breaks the market into four stages. Stage 1 = sideways, basing, bottoming phase, Stage 2 = up-trending, bull phase, Stage 3 = sideways, topping phase, and Stage 4 = down-trending, bear phase.
The main indicator he uses to determine the stages is the 150-day moving average and price. Lately, however, he has switched to using the 200-day moving average due to the market’s increased volatility.
History proves that (stock) markets go in bull (up) trends and bear (down) trends. So it is up to the trader to recognize when that shift may be occurring. If we can anticipate possible shifts in long-term trends, we can get ready to align ourselves with the trend and make money with very little effort. As everyone knows, NO SYSTEM IS 100%, but that is not necessary to make money in the markets.
As long as you milk your winners as long as you can and cut your losers fast, all you need is a prudent money management strategy to keep you in the game.
Teacher, author, and ex-hedge fund manager Mike Swanson is one such trader that implements the T.W.i.T (Trade with Trend) philosophy and utilizes Stan Weinstein’s Stage analysis in his own trades. You can start receiving his Free Newsletter and learn his trading philosophy because as you’ll learn in the following video, the most important thing you can do to gain financial freedom is educate yourself so that you can capitalize on bad times as well.
If you trade (stock) markets already and find yourself getting stopped out a lot, step back, get perspective, and remember T.W.i.T … Trade with Trend!
The video points out some undisputed demographics. Any comments?