every trader fears whipsaws.
so much so that he or she keeps the fear switched on all 24 hours
even after the market hours.
marie curie had said
"nothing is this world is to be feared
but to be understood."
going by this
let's try to understand whipsaw
and cut the fear to a realistic size.
whipsaw doesn't happen all the time.
in actual, 4 types of situations can emerge
1.no whipsaw, big move
= dream outcome a trader dreams of.
2.no whipsaw, small net move
= no-trade day
3.whipsaws, followed by big move
= if you survive the shake-up and still manage to be awake and in the trade in the right
direction, you will forgive the nightmare.
4.whipsaws, almost no net move.
= the nightmare!
so, as you see
you need not fear all the time.
rather, you should try and find ways to anticipate and expect the stage
and avoid the bad setups
and trade the good ones.
how to identify?
after pro-trend big moves, expect whipsaws called consolidation.
at advanced stages of trends, expect markets to rest and whipsaw.
if you can successfully identify and avoid trading urge in the above mentioned conditions
you need not fear whipsaws leading to financial whiplashes
and hence trade with confidence!
(www.niftyshots.blogspot.com)
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