Price — The Truth, The Light, The Way

• Work to understand price
• Price does not move in a straight line
• Big moves take time
• Volatility is your friend and helps to compress time
• Although volatility is your pal, it can cut both ways
• If a stock moves 30% a day, then you can’t trade with a 5% stop
• Don’t expect a volatile stock to stop behaving as it has been and only move in your favor just because you’re now in it.

 

Random Thoughts:

• Observe but be slow to shift gears — we are trend followers, not predictors
• It’s the market’s “job” to shake you out
  • The market will do what it has to do to create the most pain (for the most people)
  • The market will often do the obvious in the most un-obvious manner
• Err on the side of the longer-term trend
  • DO wait for entries
  • DO use protective stops
  • DO trail and scale as offered