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You Can Observe a lot by Watching!

Options Trading TradeKing



I have been trading, and mentoring others on  trading options for the past decade.  I have worked with over 20,000 students fromSidney Australia to Albany New York.  Inthat time I have worked with many systems, indicators, and studies and come to oneconclusion – If you draw enough lines on a chart, your stock is bound to hitone of them eventually.  For me, tradingis not about impressing others with fancy algorithms.  It is about Yogi-isms. 

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Yogi Berra was one of the most colorful figures in all of baseball.  An amazingplayer, starting his career in 1946, he eventually was named the Manager ofthe Yankees, the Mets, the Yankees again, and then finished out his career withthe Astros in 1992.  Yogi’s contributionto Americana actually goes far beyond the sports world.  He was also known for creatively phrasingsome of the most obvious thoughts ever!

                  Itain’t over until it’s over!

      It’s déjà vu all over again!

                  Thefuture ain’t what it used to be!

                  Andfinally – You can observe a lot by watching!

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Past performance is no guarantee of future returns. But youcan observe a lot by watching!  That is mymotto for my trading strategy.  The rulesthat I have for trading have grown out of long hours of chart observation.  They may be obvious to some and too simplefor others, but sometimes simple is best. Here are my top eight chart observations.  (Charting package is from “The Wizard.”)

1. Trading with the trend is the safest way totrade. (Path of least resistance)





2. 
Breakouts provide the greatest potentialfor highly profitable trades. (Beginning of new Volatilityphase)





3.
The definition of a bullish trend is “aseries of higher highs and higher lows”





4. The definition of a bearish trend is “aseries of lower highs and lower lows.”


5. Oldresistance becomes new support.



6. 
Oldsupport becomes new resistance.

7. 
Retracements are a healthy component ofa trend.

8. 
Reversalsand retracements look very different.

Disclosure:  TheWizard and the author are currently holding no positions in the securitiesmentioned in this post.

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