≈ The Sidelines Beckon. ≈

Traders,

I introduced you to 5 tips from my Bear Market Playbook in yesterday’s message. Today we’re looking at the first one: if in doubt, stay out.

As a trader wielding well-crafted systems, you must know which environments are conducive to your strategies and which ones aren’t. For example, suppose you’re a rookie swing trader implementing the S.T.E.P. system. Further, let’s assume you find it far easier to generate profits in an uptrend than in a downtrend. Given these facts, wouldn’t you agree that forcing trades when the S&P 500 is below the 50-day moving average (e.g., in a downtrend) is ill-advised?

Doubt arises from adverse conditions. And in this particular case, I’m suggesting that a downtrending (or even choppy/volatile) market means “adverse conditions” for a rookie swing trader.

Thus, we could word the phrase this way: “If adverse conditions for your system arise, such that your odds of success are low, then stay out!”

Parking yourself on the sidelines, watching the drama from afar, and not making money is preferable to trading and losing money. Right?

This illustrates another important reality. Your returns as a trader will be lumpy: weeks of feasting, followed by weeks of famine. Capitalize when conditions are ripe. Then retreat and protect your treasure when conditions are crap.

Rinse, wash, repeat.

Chart of the Day: Buyers Return to Disney

After falling 30% from their peak, Walt Disney shares finally found a bottom. A higher pivot low formed with Tuesday’s bounce to signal buyers’ return. Of course, it doesn’t mean the stock will go straight up from here. But it does mean the momentum has shifted. Bulls now have a foothold.

Video of the day: Queen’s Court: Iron Condor set up on the Russel 2000 (RUT)

In today’s Queen’s Court, Coach Emily analyzes the current technicals on the Russel 2000 chart (RUT) and sets up an Iron Condor for the February expiration following the Cash Flow Condors Premium System rules.

Today’s line up

Traders Lounge 11 AM EST

Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.

The Coaches Show Replay

If you missed last night’s episode where Coaches Mark Justice and Greg Holmes talked about Goal Setting or would like to watch it again, check it out in the video below.

Halftime Report 12:30 PM EST

The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day, and fun in a way that only Matt and Tim can deliver.

Trade Masters 7:00 PM EST

Every Wednesday at 7 PM EST join us on the Trade Masters where two Coaches go head-to-head to see who can find the best trading setup.

Trading Justice 456: Portfolio Design for Beginners

In this episode, Coach Tim teaches Portfolio Design for Beginners. Listen in to learn about the importance of portfolio design with thoughts on cash flow, growth, and speculation strategies. Learn more about capital allocation rules, position-sizing, the risk of ruin, and a proper mindset on how to approach learning to trade.

Listen to the episode in the player below:

Financial freedom is a journey

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