Wednesday, 17 September 2014

The Trend is not your friend

Speaking of the weather.   You know the saying "The Trend Is Your Friend"?   Well not exactly.

The Trend Is Your Fair-Weather Friend

The trend of course is very important when it comes to your trading analysis.  You don't want to swim against the current, however the trend is your Fair-Weather Friend, it can change, currents can change and pull you under.  

In other words, look a little deeper, perform more analysis and be prepared for the trend to change.    The trend might be up but are there major trendlines in sight?  For how long has the trend been up?   Are you approaching fresh monthly, yearly highs?  Is major economic news (think FOMC, ECB, NFP) on the horizon?   All sunny days come to an end.  All rainy seasons dry up.