Have you ever heard any of these phrases or sayings? Some has merit to it and some probably not worth paying attention to. I wrote a short opinion about each. Hopefully, I presented the sayings correctly.
'Fear and Greed'
- Well, this is what they say drives the market. You have those that are greedy and drive the market up. And you have those that are fearful and drives the market down.
"Buy on bad news, sell on good news"
- Maybe this work sometimes but most times it don't. it's not recommended.
'Sell the news, buy the rumor'
- Not recommended either. But the premise is that you sell to those jumping on the news that was already accounted for in the market.
'Don't sell or buy around news time.'
- I agree with this if you want to minimize your risk.
'Buy low, sell high.'
- It's hard to pick the bottom or top but this is what it's all about isn't it?
'Buy high, sell higher.'
- Many market educators and professionals would teach this. It works only when it works. Hey, another cliché. But the idea is that something in motion stays in motion until some force stops it. A market making new highs tend to go higher.
'Buy strength and sell weakness.'
- I agree. You want to buy into a strong market. One that the herd is in to. But you have to ask yourself, what is a strong or weak market.
'Buy near support and sell near resistance.'
- A classic technical analysis saying and basic technique that when coupled with the next cliché, among other things, can help one be successful in trading.
'The trend is your friend.'
- If the trend is up, look to go long. If the trend is down, look to short. Again, you're going with the herd. The hard part is defining the trend.
'Indicators are lagging.'
- Indicators are based on price. They only tell you what already has happened. However, used the right way indicators can help with trading.
'Price is king.'
- Understand how to read price and you sometimes can determine with high probability what price is doing and could do.
'Price and volume are the leading indicators.'
- In a sense they are because they tell you what the market is doing at the moment. But still, no human nor machine can predict the future.
'Win big, loss small' or 'Cut your losses and let your winners run.'
- Good money management is one of the major keys to becoming a successful investor/trader. In this game, there will be losses and you must expect them. But keep them small.
'Don't try to catch a falling knife.'
- Markets tend to fall faster than they rise. The reason is fear.
'Stock investing is gambling.'
- This one is up for debate. But certain aspects of how you approach investing and trading can be considered gambling. For instance, if you do no research at all, or have no idea of entry or exit strategy, well you can consider yourself gambling. You're playing by chance.
'Don't have hopium'
- that is to say don't hope the market will do this or that. Still, though we do hope and I've heard even pro's so the word hope. But we should have a plan, rules and stick to them, then we won't have to hope so much.
Which brings me to..
"..The wind blows wherever it pleases. You hear its sound, but you cannot tell where it comes from or where it is going..." John 3:8 (NIV)
Same is with the market and price. We don't know which way price will go because we cannot and should not try to predict the future. What professionals do is go with the flow. Follow the herd (institutions). You are like a sail boat that goes in the direction of the wind. It waits for the right setup and move when it's time to move. And stop when time to stop.
There are more and I will add them as they come.
--Nigel
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