4 Big Bear Markets

Used from dshort.com

Kondratieff Wave cycle

K-wave chart presented from http://www.longwavegroup.com/ and http://zerohedge.blogspot.com/.

Contrarian Thinking

I read Market Wizards again now after 1 year of study on trend-following, counter trend trading and so on... I was really thinking there is a perfect system or some people that rally exactly know why smtg moves -- so after all trading in different modes and different markets I feel now a bit "baptized by fire" and got back to basics.

Mark Douglas is very true that people don't think trading is casino - but as I see those 95% group must be doing exactly this.

I was thinking after I read "Trend Following" as I started looking for trend systems. There are just as great "Trend-followers" as much as those that are labelled "Contra-traders". I believe that the intuition of the discretionary trader is as much of a weapon as the faith in the long temr success of the trend system in the trend trader. They have different personalities and so are their trading styles..

However what they share is the true sense of success and that is most important.

What I want to clear is that what differentiates a Successful trader from the 95%. Let's take CONTRARIAN thinking for example:

1. When a market is making 20 or 50-day High and is very bullish, then going with the Strong trend is obvious?
But then how many are strong enough to buy the 20, 50, 89 or 200 Day High. Think most people will have this FEAR it is too high and have to retrace - so 95% group all starts to sell. A bit what happens with S&P last 2 months..

So then CONTRARIAN seems is to go with the trend as for the majority of people going with the flow is just too hard - most people think they have to struggle.

Think I read this in FF time ago that it takes 55-60% bullish sentiment for a rally - but a 90-95% bullish sentiment is a sure Trend reversal.

2. So again when the whole public is convinced - it is so easy to go with the crowd - but then it takes CONTRARIAN thinking to see that if everyone bought there is no one left to sell to.
.......................
think it is the psychological frame - then comes to the execution frame - which is where Risk management kicks in:

1. First to trade as little as to not lose your capital as then there is no more opportunity.

2. Take any trade with reasonal R/R since every next around the corner might be the winner - but take only a little hit so you can withstand the series of fake signals until the good trade kicks in.

USD/JPY -- AB=CD measured move

Posting here for a reminder on this AB=CD measurement as it works well when applied with proper Risk Management. The chart speaks for itself.

Trading - a Mind Game

Just a quick reminder of things I have been thinking many times and wanted to put them down in order to have a reference in the future.

Funny fact that every time I get a nice looking idea - the market does the opposite.

I was watching those proposed ideas I posted charts for - but the moves seems to be of a greater extent - so I don't enter the trades... many times I start with great confidence trades that work well in the beginning but then all starts to mess up and I lose my point of view...

maybe it similar with most because markets are dynamic and one has to change his view and adapt to the change as fast as it happens but at the same time -- there is the risk of overreacting and changing one's mind too much..

maybe a balance, patience and low risk is a key to solve this equation...

EUR/JPY Ascending Triangle

4-hour chart.

Ascending Triangle consolidation gives a nice target around 132.75 -
- coinciding with the daily R2 pivot - 132.79.

Again my idea is a short term one -- loking for sharting the initial test of the High witha pullback target around 131.31..

AUD/USD Hourly - possible Double top?

No doubt I got fooled playing a larger pullback after the initial Trednline Break.

Now that the Uptrend is steady - marked by a healthy 38.2% Fib retracement + Support at the 89-hour MA -- I have a new contra idea -- a possible Double Top formation.

Previous High was 0.7092 -- Daily R2 Pivot level is 0.7085 -- So this confluence Plus the parabolic move above the Red trendline would give me a good R/R ratio opportunity for a shor term Short around the first test of 0.70 90/5 level..