Stock Market Wisdom-learning To Trade Like The Legends, Part 7

by Gary E Kerkow - Date: 2010-09-13 - Word Count: 407 Share This!

Top traders and investors know the most money will be made by following the main trend. Jumping in and out of the market trying to scalp it, is generally not a good idea. The big money is made playing the long swing. The key is to stay with your winning trade, until you get a definite indication the trend has changed. This is called, letting your profits run. I use a weekly chart to determine the main or major trend. It is never a good idea to trade against a major trend. Stay in sync with the market, and always trade in the direction of the major trend.

Diversification is a crutch for ignorance. You are much better off only trading when the odds are strongly in your favor. Gerald Loeb stated, "The greatest safety lies in putting all your eggs in one basket, and watching that basket". I totally agree. If you want mediocre results, at best, diversify. If you want superior trading results, you must only trade the very best opportunities. Top traders know you are much better off with one great stock, instead of ten average stocks, spread across ten different sectors. It is amazing, listening to some of the so-called experts who preach diversification. They simply do not have a clue on how to attain superior trading results.

Conventional wisdom tends to be a disaster for a trading account. This includes the stock market, and the futures market. The majority of traders blindly follow this way of thinking, and doing things. They are usually not very happy with their trading results. Examples of conventional wisdom include, buying cheap stocks, thinking it is a great deal. Most cheap stocks are cheap for a good reason, and usually just keep getting cheaper and cheaper. A great example is listening to so-called experts like Jim Cramer. The Cramers of the world will lead you on a path, to not only monetary failure, but will strip you of your psychological capital also.

The world's best traders and investors know that conventional wisdom is mostly hogwash. It is put out there to fool most of the people, most of the time. It works only too well. Elite traders do not follow the crowd. They implement historically proven methods and principles, which are considered unconventional by the vast majority. Elite traders think and act differently. That is why their trading results are superior, and they make vast fortunes trading the various markets.

Related Tags: trading, stock market, trend, investors, traders

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