Everywhere we look nowadays, there’s talk of bear markets and people throwing the “R” word around, making everyone super nervous to invest their money.
But I’m a fact-based trader…
So when the put/call ratio was at the 1.30 level last Tuesday, which it hasn’t hit since the COVID-19 crash in 2020, you bet I paid attention. That’s because it doesn’t hit these levels often.
I’ve been seeing something amateur traders have been doing a lot as of late… And to be blunt, it’s dumb.
They’re trying to pick bottoms, which is the absolute worst thing you can do in the chaos we’re experiencing right now.
Bottom picking, or countertrend trading, can have the same bloody results as catching a falling knife — unless you have decades of experience under your belt.
Bottom pickers try to make money from trading against the current trend of the markets, like buying the stocks investors are all selling. It is a form of swing trading where traders think they can pinpoint where the next reversal will be, thus beating the market.
However, in the real world, these assumptions almost never go right.
But it’s not just bottoms… These naive traders are also shooting for the tops, too. They’re always looking for the lowest price of a stock to get in while being desperate to get out at the highest price.
I can’t tell you how many times I’ve seen traders go off course from their trading strategy by putting on tighter-than-usual stops and not letting their profits run, and vice versa.
There’s nothing that’s more an indication that you’re an amateur in the markets than trying to get the low and high of the day.
“Roger, I like your professionalism, integrity and dedication to clients.”
Vincent R.
Signal Lines are used in technical indicators, especially oscillators, to generate buy and sell signals or suggest a change in a trend. Oftentimes, signal lines are moving averages of a technical indicator, such as the MACD and stochastics oscillator. A signal line is also commonly known as a "trigger line."
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