subject: Stock Market Trends And Trading Systems [print this page] Stock Market Trends And Trading Systems Stock Market Trends And Trading Systems
To expand your success trading the market it's beneficial to unite an appropriate trading system with the current stock market trend. There are those that are very skilled at counter-trend trading, but it takes a lot of study and practice. It's much easier to follow the market if the market is in an uptrend, go long if the market is slumping watch for shorting opportunities.
Seriously consider devoting some of your chart-research time to following the trend on a pair of the major averages. A goodcombo to observe would be the S&P 500 and the NASDAQ Composite a blue-chip average and an index of smaller stocks. Another pairing may be the Russell 2000 and the Russell 3000.
Put a number of bars on the charts so you can get a perspective. A daily chart of the last 6 months, 1 year, and 2 years will absolutely give you the market's direction. Switch to a weekly chart and see how the identical data is displayed with weekly bars. Be aware of the location of tops and bottoms within the various trends.
Another smart study would be locating those stocks that move in tandem with the indexes. Finding those stocks that constantly move against the trend could develop into a good pairs-trading system.
The big indexes usually move quite fluidly. As your market trend study develops it may be that your new skills will enable an ETF index trading system. There are many good ETFs in this arena: DIA, QQQQ, IWM, etc. Many traders focus exclusively on the indexes and are very profitable.
Using a few moments to analyze the complete trend will keep you moving with the flow rather than fighting the current. Using a sound trading system that agrees with the trend's movement will certainly increase your odds of winning.
