Sunday, March 25, 2007

Surviving the odds

Conflicting and competing forces converge for supremacy in the stock market.
In a mortal combat for survival of the fittest, unless you are well-prepared, well-trained, and well-armed, you are lucky to come out alive, unscathed and unhurt, let alone a profit.

Without knowledge and a sound philosophy of the market, you will be at the whim and fancy of the manipulators, riggers, tricksters or professional traders.

Constantly at the mercy of every panic, boom or bust, rumors, tips, hope, greed and fear, in fact of every wind that blows, the retailers lie awake every night pondering, weighing and questioning as to the very action they should take the next trading day.

These small timers have no guide as to when to take profits or cut their losses. They just act on premonition or their instinctual feel. The result is that they sell prematurely in a good and profitable situation or overstay and lose back all or most of the gains or let their losses run too far into the red lights. The inability to take a small loss is a big blunder few can overcome.

Charts discount all known information which includes earnings, dividends, bonus issue, mergers or acquisition, whether declared or intended. If you disagree, you need to study further or else don’t use charts at all.

Charts, however, cannot forecast unforeseeable events or natural disasters that are unknown to anybody. for example: landslide, typhoon, hurricane, tsunami and to a certain extent war.

Follow chart rules to the letter or rules of your own as your experience dictates.

With a well-thought-out plan and a good strategy, you will be able avoid a big loss and maximize your gains. You will know how to free yourself of irrational and excessive emotional actions.

The market pays well to anyone who approaches it intelligently.