Thursday 20 December 2012
Obviously, there was no ending activity, based on the close
in silver, pointed out yesterday in a chart to watch, but that
is perfectly okay. The purpose of the exercise is to be alert
for possible set-ups, for when patterns repeat, they provide
a trading edge. When the patterns do not repeat, that is
important information, too, for we then know to stay out.
Why do so many people lose in the markets? They front-run
market development, placing a bet on what they “predict” a
market will do. Markets do not care what anyone’s opinion
is, for markets will do what they are going to do. What we
continue to advocate is to FOLLOW, not get ahead of the
There are many who will act on UNCONFIRMED market
patterns, and that is where problems, especially of the
margin kind, arise. Then, egos get in the way, and the
to-do mentality sets in, and trades “get away.”
This is not a “Look at what we think the market will do,”
example. Instead, it is “Here is a POTENTIAL market set-up,
WATCH what happens.” If the pattern held, it could have
aided in finding an entry to get long, IF the pattern were
confirmed. It was not. Price sailed lower, this morning, but
There was no commitment because there was no confirmation.
There was no commitment because the RULES do not allow a
position to be taken without the confirmation. In many ways,
this is so simple, but few take the time to establish written rules
and then ADHERE to them.
We posted yesterday’s chart as much with this outcome in mind
as the other one of holding, for if the close did not hold, we had
a great example how to trade successfully in any market, and
avoiding losing situations is just as important an element as is
finding winning ones.
With established rules, the winning potential trades will always
come along, but with less frequency than losing “opportunities.”
Just as the maxim holds, “the trend is your friend,” so too, can the
market be…or, it can be your worst enemy. Actually, the market
is neutral. Like we said, it does not care what anyone’s opinion
is. The greatest potential enemy is ourselves, if we have no rules
and the discipline to enforce them.
The other important message from the market was, this sell-off
ain’t over. Caveat emptor!