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morpheustrading

If You’re Seeking The Holy Grail In Trading, Stop Wasting Your Time!

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Many traders, particularly newbies, are on a continual quest to find the holy grail of trading.

 

“If I could just find that one perfect trading system, the one that works every time, I’d be rich!”

 

“Stock trading is too hard for me, but I know I will definitely make it big time if I start trading FOREX.”

 

“FOREX is not working for me either, but I am certain I’ll make the big bucks once I switch to trading futures.”

 

These and similar statements are signs that a trader is living in a fantasy world.

 

Although Indiana Jones indeed found his holy grail (and a lion’s head), remember it was pure Hollywood fiction (albeit a fantastic work of art).

 

I’ll talk more about the non-existent holy grail of trading later, but let’s get into the actual inspiration for this thought in the first place…

 

A Sudden Flip Flop In Our Stock Market Bias

After a few days of tight-ranged trading, stocks broke out to the upside on higher volume Wednesday (November 13), then built on those gains in the following session.

 

The S&P 500, Dow Jones Industrials, and S&P Midcap 400 indices have all once again rallied to fresh all-time highs. The NASDAQ Composite has also broken out once more, and is trading at its highest level since the year 2000 “dot com” bubble.

 

Although last week’s ugly selling action in leadership stocks and the main stock market indexes forced our timing model into "Neutral" mode on the close of November 6, the November 13 price and volume action in the stock market was convincingly bullish.

 

While a few of the best leadership stocks were indeed hit hard last week, we have seen enough bullish price action this week to suggest that the market may still be able to push higher from here.

 

The Trend Is Always Our Friend

 

Because of the reasons above, we have placed our stock market timing model back into "Buy" mode.

 

This does not mean the stock market will go higher from here, as the possibility for false breakouts in the major averages still exists.

 

Nevertheless, with most leadership stocks still holding up well, we do not mind taking a few new shots on the long side.

 

If new stock and ETF swing trade setups in our momentum swing trading newsletter trigger for buy entry and extend higher, then we will look to add more long exposure as new setups develop.

 

If, however, our setups trigger for entry and quickly fall apart, we will simply be stopped out and forced back into cash.

 

MTG Market Timing Model – Simple And Effective

 

The core of our model for timing the stock marke (a key component of our Wagner Daily newsletter) is primarily based on the three elements below:

 

* Accumulation/distribution patterns in the S&P 500 and NASDAQ Composite

* The trend of all major averages – Are the S&P, NASDAQ, and Dow making ‘higher highs” and “higher lows” on the daily charts? Are they trading above their 50-day moving averages?

* Price and volume action of leading stocks – This component is the heaviest weighting in determining our overall market bias

* As you may have surmised, the composition of our market timing system is not fancy, but is quite effective and has a solid track record for accuracy.

 

Still, determining the proper bias for the timing model requires a bit of elbow grease (scanning through tons of charts every night), as well as some discretion.

 

Although many traders are on a quest to find the “holy grail” of trading systems, it simply does not exist. For example, absolutely no system in the world for timing the market works 100% of the time.

 

Once a trader learns to accept that no trading strategy is perfect, and begins to understand that one only needs to slightly skew the mathematical probabilities in one’s favor to be a consistently profitable trader, only then can true progress be made.

Edited by tradingwizzard

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Once a trader learns to accept that no trading strategy is perfect, and begins to understand that one only needs to slightly skew the mathematical probabilities in one’s favor to be a consistently profitable trader, only then can true progress be made.

 

Hi morpheus,

So there is a holy grail.....its skewing the maths in our favour.

regards

bobc

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Quite a valid point. I guess you got me there!

 

I suppose I need to rewrite the whole article now, eh?

 

;-)

 

Deron

 

Hi Deron

I dont think you need rewrite the article

You still need a starting point ..... in your trading model and mine, consolidation/ accumulation.And you are obviously going to tell us a bit more.

regards

bobc

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