When the market is in a volatile phase, think about your general trading approach. For example, are you a day trader, position trader, or a swing trader? All fit different market environments, so staying with one style in any market environment might actually reduce whatever edge you have gained. For my tastes, the market environment we have now calls for swing trading …
The basic principle for swing trading is finding a market that is trapped in a sideways trading range (also called a congestion area), or in an up-trending or down-trending channel on the chart. On the chart, the trader must be able to distinguish some clear support and resistance levels that are boundaries of the congestion area or channel. When a market price approaches the support or resistance area boundary, the trader will establish a position: long if prices are moving lower and close to the support boundary, and short if prices are moving higher and toward the resistance boundary.
I excerpted the above from a Jim Wyckoff article (The Basic Principles of Swing Trading) in “Synergistic Trading,” the e-newsletter that TraderPlanet sends out. He explicitly and clearly explains the basics of swing trading for your consideration. Check it out …
According to Bloomberg, global M&A volume was $667 billion in the fourth quarter of 2010 — up 33% over 2009’s fourth quarter and up 30% from the first quarter of 2010. Both in terms of deal volume and the number of deals, the fourth-quarter’s level of activity is still well below the recent peak from the second quarter of 2007 (when volume and the number of deals was nearly twice the 4Q10 level). Investors often associate (always in hindsight, of course) intense periods of M&A activity with approaching peaks in stock prices — but it does not appear that recent activity has reached a frenzied pace. Activity has been trending higher since pausing last spring as the crisis in Greece emerged. For the full year 2010, global announced M&A was up 26% to $2.2 trillion. The hottest sectors were Oil E&P, Electric Integrated and non-U.S. commercial banks.
The above exemplifies a market environment ripe for swing trading. These deals often take a while to come to fruition. So, from the moment the initial rumors begin floating about to the actual signing on the dotted line, the companies involved often trade up and down in a defined range. “Will it happen or will it not” drives the movement, and this can go on for some time.
Just one more thought for today. Below exemplifies the reason economics is more art than science, and, as well, it is the reason we all need to understand the agenda of economists when using them for our understanding of the big picture.
The survey from the National Association for Business Economics found 62.4 percent of the economists polled think the central bank’s $600 billion stimulus plan is working. Another 21.8 percent see the policy, which has come under fire from some conservative politicians and a number of emerging market policy makers, having no impact. Another 15.8 percent said the program was actively harmful.
Trade in the day – Invest in your life
