Day Trading 101 by David Borman

Author:David Borman
Language: eng
Format: epub, mobi
Publisher: Adams Media

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TRADING IN AN OVERHEATED MARKET

Riding Wild Market Swings

Most times the market operates in a well-organized manner with predictable unidirectional sector moves. Other times the market can be emotional and behave erratically. These times of extreme upward and downward movements can be an excellent opportunity to keep a cool head and make money by getting into trades at the bottom or top of valleys and peaks.

Market emotions come in two forms: euphoria and panic. In the euphoric stage, most market participants share the same good feelings: the market is going to go up, up, up! However, euphoria in the markets can come and go very quickly. All it takes is one bad piece of information to end the good feelings of traders and they will take their profits, or worse yet, begin shorting their positions. Your goal is to spot these euphoric feelings at their peak and short the sector they are in, or even short the whole market with a bear ETF, shorting an ETF, or even shorting an S&P 500 future. Often taking a position that makes money when the market goes down can be a safe bet, especially when all seems too rosy to be true.

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