Saturday 25 April 2009

trending trade versus scalping trade

Generally speaking, scalping is most suitable for the following scenarios:


1. flat moo rivers, which are not frequent in index trading;


2. in a downstream moo river, after a full crossing from the upperbank to the lowerbank, hence the bounce off the lowerbank is generally a weak affair, corrective, rather than impulsive, until it somehow meanders across to the upperbank for the next full crossing down;


3. in an upstream moo river, after a full crossing from the lowerbank to the upperbank, same logic here as above in a reversed way.


Trend trades are mainly for full impulsive crossings, hence let the trend be your friend, trend trade of longs in upstream moo rivers and shorts in downstream moo rivers, any other trend trades are frustrating and tend to carry more fantasy than reality, causing the trend traders hating themselves for not piling up points as the scalpers do.


Scalping for me is when you know where to get off and where to get on, trend trade is when you don't know where to get off and once get on, you don't want to get off.


There is nothing wrong with trending trade, as long as you are prepared for it mentally

If you spot a trend, and you are a trend trader, you get on and hold, full stop! until it hits your target.

But it is not that easy. If you hold and watch the market, then you get jittery and uneasy with the ups and downs in the meandering range before the trend continues like now and sometimes trend gets started but fails at a later stage as well.

Scalping is just about the same, you kick yourself when you miss out on the free ride on a trend.

It is a non-brainer, but it is all psychological, you have to keep your heart balanced and happy.

So a mixbag of scalping and trending trade is perhaps the best way.

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