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Adapt to the Markets

 What works one month may not the next. Trading setups you crush one year may be extinct the next.

“old school” bounce play. Rule number one, do not be the first to buy. Let the market stop going down, and then dip your toes into the water and buy a little. Let the stocks hold higher and then when they do, this is when you load up.You only take on huge positions after the market has stopped going down and the stocks and market has held higher. Don’t be a hero and try to be the first one to catch the bottom. There is more money in loading up after the stocks hold higher.

George Soros famously warned, “The market today is dominated by much younger people who have not experienced a bear market.” Hard times were about to visit.

Remember, if you are playing for a bounce of 88.50 SPY, have a list of stocks ready to go with great prices. Near 88.50 buy just a taste of the stocks you wish to trade. Wait for SPY to hold higher. See which of the stocks that you bought a taste of are trading the strongest. Buy more of these stocks. Below 88.50 SPY, you must exit your stocks. Set plans to exit your stocks if they trade in your favor.

it is a mistake for a new trader to try to catch the bottom.

It is human nature for some traders to try to catch the bottom of the market or a stock. Some wish to be that one trader who was correct while others on the Street were wrong. Some desire to be that guy on the desk who calls the bottom and receives the adulation from other traders. But this is just ego. And trading to stroke your ego will manifest a short trading career. The object is to make money consistently. Not try to prove you are smarter than others.

scalping against the trend with really strong or weak stocks is not advisable. Scalps are for stocks that are not clearly directional. When a stock is really trending, we want to focus on where to load up with the direction of the trend. We want to focus on a big trade.

Many traders claim that you improve more during a difficult market than one ripe with opportunity like I saw my first few years. I totally agree.

 bad relationships can ruin your trading results. In this case, adapting did not mean learning a new style to trade, but rather cutting out negative personal influences. While I’m no Dr. Phil, if the dynamics of a romantic relationship turn sour, so too can your P/L.

You need a ton of experience first. Stick with support and resistance plays first.

And as a new trader, you should not be focusing on one of the harder trades with a market where it is wiser to follow the momentum.

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