As the market approaches all-time highs, the general public is beginning to hear a steady stream of doomsday predictions, along with their colleagues shouting that this is the beginning of a new bullish market. You can now go to the bookstore and find many books predicting the end of the fractional banking system, some of which go so far as to predict the end of modern civilization as we know it. You can find the announcement of a new bull market in several print magazines and numerous popular websites. Here is my opinion on the situation: things are never as good as they seem, and things are never as bad as people think.
The truth of the matter is somewhere between these two extremes.
As a short-term trader, where the market goes is of little importance, at least in terms of trade. Of course, the direction and speed of any market movement can have a profound effect on our personal lives. Let’s stick to trade for now.
As the market is nearing peaks for all time and the P / E ratios are high, I think a reasonable trader will be cautious when trading to peaks for all time. Breakthrough trading to new heights for all time is a difficult business. The logical assumption would be to trade to the short side, right? no.
As traders, we are chart traders and the sensible approach to this uncertain market would be to trade what you see on the chart, just as you always do. There may be warning jumps in price, both long and short, which should remind you that powerful trading forces on both sides are making their own plans for possible market results. After all, we are graphics retailers and we are still striving to understand what the graphics and the market context show.
So, do you need to change your trading style with all the noise we hear?
The right course, in my opinion, is to keep trading the way you would do every other day; but I would have an idea in my mind that these were times of heightened emotion, and I would turn to the conservative side of things. Stick to your trading plan and keep in mind that unusual movements both up and down are already part of the trading equation.
As you may have read, just when everyone is convinced that the market needs to fall, it keeps going up. Sometimes it explodes in the long side, this is called climbing the wall of anxiety and the market can climb the wall of worry much longer than your futures account can withstand. On the other hand, there are great opportunities to jump down as bear traders begin to research for any market weakness. It is your job to maintain the exchange rate and be aware that these are times of increased risk and to be diligent in avoiding high-risk futures trading.