Recently, I have spent quite a bit of time on the fundamentals of trading because the flow of questions I receive focused on this as a need. Today, however, I am moving up the ladder a wrung or two because I don’t want to ignore those who ask questions specific to trading. Although many of these questions are too specific (What will gold do this week?), I can take the tenor of all the questions and work with that, which I will now do …
There are two basic analytical approaches to trading – fundamental or technical. The road I will now take you down crisscrosses between the two. I am going to spend some time talking about market indicators, the signposts that point to potential market direction. Every trader, fundamental or technical, relies on market indicators to define potential trades, so underestimating their value is not possible . . .
The first thing I want to do is recommend a book to all of you – Market Indicators, Richard Sipley. Sipley’s book looks at over 100 market indicators (the tip of the iceberg), but this is not its strength. The power of this book is the perspective. Sipley looks at the indicators that point to what professional traders/investors are doing in the markets, the flow of big money, if you will. Like indicators themselves, understanding the flow of big money is not to be underestimated.
So, for the next few articles, I will write about some of these indicators, and I will discuss how each can help us be better traders. Before I sign off today, though, I want to give you a couple of quotes from the book, as these quotes reflect one reason I liked this book so much – Sipley and I view trading markets from the same mindset.
Some people suggest that investing is a form of gambling, complaining that they can do as well playing the Pick-3 Lotto, or betting on roulette. Nothing could be further from the truth. In Las Vegas, the house always has the edge. In the stock market, you can have the edge, if you wait until the conditions are right.
The above reinforces what I have been saying as recently as yesterday, and the quote below reinforces what I have been saying about this column and the writer of this column since I started writing it.
I’ve looked at most every indicator out there, considered every nuance I could find, but I also recognize the karmic danger of portraying myself as an expert. I urge you to consider other voices and opinions.
So hang around as I take this column to a different level, a place where revelation just might open your eyes (as it did mine) to new perspectives, perspectives that just might give you the edge so necessary to keep trading from being just a pick between red or black on the roulette wheel.
Trade in the day; invest in your life …
