Share Marketplace Accomplishment Utilizing The 1st Down Trading Technique
Successful trading combines timing, capital management and emotional control. The other key aspect is using a proven way to let you know exactly when to establish a position in the marketplace. A lot of decades ago, Jesse Livermore, who is arguably the largest stock marketplace trader ever, developed a system or strategy called "Top Down Trading". The idea behind this method is to have as numerous key factors in your favor as potential prior to taking a position in the stock marketplace.
The main aspect Livermore would establish is the overall current marketplace direction. Is the general stock marketplace in an uptrend or downtrend? A new position in the stock marketplace would just be taken in an uptrend. Approximately 75% of all stocks follow the current general marketplace direction. This makes it very wise to just buy a stock with the general marketplace in an uptrend.
The second aspect is to check the particular industry group of the stock you're looking at. Let's say your stock belongs in the "Mining-Gems" industry group. Because stocks tend to move in groups, its important to know if this particular industry group has been acquiring stronger or weaker above the last few weeks and months. You would want the industry group of your stock to acquiring stronger. This industry group evaluation will be able to account for 30-40% of a stock's ultimate value movement.
The next aspect to think about is whats called tandem trading. Compare your stock to a sister stock in a similar industry group. If you are looking at stock in Wells Fargo, check out Bank Of America also. Place the two stocks of a similar group next to every other and check their charts. They have to look basically a similar. This is a confirmation your stock is acting the way it must be.
The last step is the check out all four factors at a similar time. Look at the general marketplace direction, the industry group, the tandem comparison, and the actual stock you're looking at. This is your final evaluation to generate sure the odds are strongly in your favor prior to you take a position in the stock marketplace.
The "Top Down Trading" method is just as valid and prosperous today as it was numerous decades ago.
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