Stock Market Crash Again? Nadeem Walayat's Trading Lesson's

InvestorEducation / Financial Crash Nov 01, 2009 - 10:10 AM GMT

The crash commentary on every dip has been relentless SINCE the March stock market BOTTOM on EVERY CORRECTION

What happens ? The market subsequently moves to a new high.

What happens to the crash calls ? They get rolled out again on the NEXT CORRECTION!

However traders do not have the luxury of having the broker refund losses to play the NEXT crash call!

What this should teach people is not to think too much about where the market should GO i.e. crash But rather where it IS GOING!

The Truth about Market Crash Calls

1. You CANNOT know with reliability that the stock market is going to crash until AFTER it has actually peaked and entered a downtrend. Anyone that tells you a bull market is going to crash is going to lose you all your money if the call is followed, as the market rallying significantly from the crash call NEGATES THAT CALL where trading is concerned! because YOUR STOPPED OUT! That money put on that call is GONE!

2. You can only enter a Crash TRADE not more than a day or so before it crashes! Crash calls made weeks, months or years in advance are WORTHLESS where trading is concerned. Where investing is concerned, all investors should have stops on their positions based on technical considerations of where they would admit their analysis is wrong on a particular stock.

Crash calls are dangerous in that bring emotions into play and instead of staying focused on reacting to price action, adrenaline gets traders to commit to actions that will soon most probably bust their accounts where EVEN if the market eventually does CRASH as they will have been wiped out by the intervening RALLY SINCE the crash call! It is this fact that that is always forgotten.

Don't believe me ? Go check ALL of the hyped stock and other market crash calls that in actual fact WERE FOLLOWED by moves that would have wiped out REAL trades had those calls been acted up on.

In recent weeks I have been sharing a few of my trading ideas that I do not have the time to turn into a book -

As to where the stock market is going next ?

I will cover this later this evening, including emailing out so ensure your subcribed to my always free newsletter

Source:http://www.marketoracle.co.uk/Article14690.html

By Nadeem Walayat
http://www.marketoracle.co.uk

Nadeem Walayat has over 20 years experience of trading derivatives, portfolio management and analysing the financial markets, including one of few who both anticipated and Beat the 1987 Crash. Nadeem's forward looking analysis specialises on the housing market and interest rates. Nadeem is the Editor of The Market Oracle, a FREE Daily Financial Markets Analysis & Forecasting online publication. We present in-depth analysis from over 400 experienced analysts on a range of views of the probable direction of the financial markets. Thus enabling our readers to arrive at an informed opinion on future market direction. http://www.marketoracle.co.uk

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Nadeem Walayat Archive

Comments

tradetime
01 Nov 09, 21:34

Near Term

Looking forward to your view on the markets, not sure what to amke of these abstract commentaries, but what do I know. More of an S&P man than a Dow, my own expectation for 1120 - 1160 looks lost now, much technical damage done S&P target now 950ish before a significant attempt to move highr?

Like I say, look forward to your view, has been pretty spot on so far

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