Stock Market Trends And Trading Systems

To expand your success trading the market it’s beneficial to unite an appropriate trading system with the present stock market trend.  There are those that are very
skilled at counter-trend trading, but it takes a lot of analysis and experience. It’s much easier to work with the market — if the market is in an uptrend, go long –if the market is falling watch for shorting opportunities.

Think about devoting some of your chart-research time to following the trend on a few of the major averages.  A perfect combo to observe would be the S&P 500 and the NASDAQ Composite — a blue-chip average and an index of smaller stocks.  Another twosome may be the Russell 2000 and the Russell 3000.

Pu ta number of bars on the charts so you can get a perspective.  A daily chart of the last 6 months, 1 year, and 2 years will absolutely give you the market’s direction.  Transition to a weekly chart and see how the equivalent data is displayed with weekly bars. Note the location of tops and bottoms within the various trends.
Another good study would be finding those stocks that move in tandem with the indexes.  Finding those stocks that reliably move against the trend could develop into a good pairs-trading system.

The big indexes usually move quite fluidly.  As your market trend study develops it may be that your new skills will enable an ETF index trading system.  There are many good ETFs in this arena: DIA, QQQQ, IWM, etc.

Using a few moments to analyze the entire trend will keep you going with the flow rather than fighting the current. Using a sound trading system that reflects the trend’s movement will surely increase your odds of winning.

Karen Stanlake is a full-time trader that also writes about stock trading systems at <a href="http://www.tradingsystemssite.com" >http://www.tradingsystemssite.com</a> .