As the market approaches all-time highs, the general public is beginning to hear a steady barrage of Doomsday predictions along with their peers screaming that this is the beginning of a new bull market. Nowadays, you can go to a bookstore and find a few books that predict the end of the fractional banking system, and some go so far as to predict the end of the modern civilization as we know it. The announcement of a new bull market can be found in several print magazines and on many popular sites. Here’s my view of the situation: things are never as good as they seem, and are never as bad as people think.
The truth of the matter is somewhere between these two extremes.
Since short-term traders are where the market goes, it doesn’t matter much, at least from a trading point of view. Of course, the direction and speed of any movement in the market can have a profound impact on our personal lives. Let’s stick to the trade for now.
As the market approaches historical highs and the P / E ratio is on the high side, I think a prudent trader will be cautious when trading at highs of all time. Breaking trade to new highs all the time is a tricky business. The logical assumption would be to trade on the short side, right? No.
As a trader, we are chart traders, and a smart approach to this shaky market would be to trade what you see on the chart, as always. There may be cautious price spikes, both long and short, which should remind you that the powerful trading forces of both sides are preparing the final results of the market. However, we are chart traders and we are still trying to understand what the chart and market context shows.
So, should you change your trading style with all the noise we hear?
In my opinion, the right course is to continue trading as on any other day; but deep down I would have the idea that these are times of heightened emotion and I would have moved to the conservative side. Stick to your trading plan and keep in mind that unusual transitions both up and down become part of the trading equation.
As you have read, just when everyone is convinced that the market must fall, it continues to grow. Sometimes it explodes on the long side, this is called a worry wall climb, and the market can climb a worry wall much longer than your futures account can last. On the other hand, there are great opportunities for jumping minuses when bear traders begin to understand any weaknesses in the market. Your task is to be aware of and be aware that risk is now elevated, and to carefully avoid trading high-risk futures.