Because trend is the tide, when the tide is up, although among it there’s a wave down but that down wave won’t go far and vice versa. By the way, why is this site mainly about the indices instead of individual stocks? Because the indices are the tide while individual stocks are the waves. Wave cannot go against tide, that’s the key to a successful trading. So accordingly:
In short, when trend is up, I’d avoid short. When trend is down, I’d avoid long.
- If my official short-term trend is down, I do short-term short only;
- When the intermediate-term trend is officially up to me, I long only, on the intermediate-term.
- When the intermediate-term trend is up while the short-term trend is down, I’ll be careful in my short-term short, because the intermediate-term trend to the short-term trend is like tide to wave too.
- When the long-term trend is up while the intermediate-term trend is down, I’ll be very careful with my intermediate-term short, especially if I follow the Non-Stop model.
- The best trade is when long-term agrees with the intermediate-term and the intermediate-term agrees with the short-term.
- This kind of tide and wave rule can go on and on, but I think you’ve already got the essences: Follow the Trend!
For how I define short, intermediate and long term please check HERE.