Page 185 - THE MARKET WHISPERER

THE MARKET WHISPERER 18 1

2. In your first three years of trading, I do not permit buying stocks moving

in the opposite direction to the market’s movement. If you do, or if

you execute a short on stocks not following the market direction, the
chances of you losing money are at least 60%. Once you have amassed
experience, you will learn how to operate against market direction in

some cases, but only under unique circumstances and in specific stocks
which show extreme movement and ignore market conditions. First,
gain much more experience.
3. Of course! If you’re about to press the buy button just as the market
breaks out to a new high, buying is a correct move that reduces risk and

significantly improves opportunity. It is reasonable to assume that the

market will strongly impact your stock and the price will go up, even if

you’ve made a wrong choice.
4. The NASDAQ 100 very often precedes the market index. If the NASDAQ

100 is rising when it looks to you as though the market is about to trend
down, there is a reasonable chance that the market will not break down,

which increases your risk. Wait for the market index’s breakdown to

occur, and only then press the short button. If the stock breaks down

before the market cooperates, short for a smaller quantity and be

constantly on the watch for reversals.
5. Since it appears that here, too, the NASDAQ 100 may precede the market

index, it is indeed better to buy, but with great caution. Buy, for example,
half the total amount you might want in the hope that the market index

will also break out to a new high. If this does occur, buy the second half

of the quantity you had in mind, on the condition that the stock’s price

has not run too far ahead.