Page 128 - THE MARKET WHISPERER

126 PART 5 - Principles O f Technical Analysis

it. Go out wherever you plan to go, and don’t stay glued to the computer
screen. Then you won’t be tempted to sell. By the way, my experience has
shown that interminably watching those screens does not help a stock’s
price go up or down.

A new trader might believe that “professional traders” tend to trade
throughout the trading day. If that is true, it does not mean that they are
constantly buying and selling. Not at all! What it means is that these traders
let the stocks do their job quietly, uninterrupted. Trading a whole day does
not mean staring at screens the whole day. In actuality, I tend to sit at my
computer system for no more than two hours a day, but do come back for
brief visits during the trading day just to keep an eye on developments,
and chiefly to ascertain no changes in the trend.

In my early days as a trader, I understood that stock trading success lies
in increasing opportunities and decreasing risks. To increase my chances,
I generally join the majority as far as market trend. How do I know which
way the majority is headed? I watch two things:
• the stock’s trend (up or down), and
• the stock’s volume, which is the number of shares executed between

buyers and sellers
Professional traders always prefer volatile stocks which crash or
frequently break out, as such stocks behave according to hysteria or greed.
These are two states in trading that can bring a lot of money into your
pocket if you know how to identify them on time and enter and exit at the
right points.

Defining the Trend

The trend is the direction that the market is taking. Because the market,
like a snake, never moves in a straight line but always zigzags, the trend is
structured from a series of highs and lows.
• A series of highs and lows, where each low is nonetheless higher than

the previous one, and each high is higher than the previous one, creates
an upward trend. This series is defined by higher highs and higher
lows.
• A series of highs and lows where each new low is lower than the
previous one, and each new high is also lower than the previous one,
creates a downward trend. This series is defined by lower highs and
lower lows.
The public generally hears only about rises and drops in the market,
but according to conservative estimates, about one-third of the time the