Well not quite but not far off either. The thing is if you look at this first chart beneath that Vince’s system has given, you can see that a sell signal was confirmed before the current drop in prices. It’s almost spooky how accurate the signal can be.
FTSE August 2015
You can see that a sell signal was given on the FTSE around 22/06/15 [the first arrow] and then the price drop [second arrow]
However, these signals can be used as good news on a few fronts. Firstly because you are being informed that the markets are weakening, secondly that you have or should be taking on a few short trades and thirdly that your current long positions may fall and you can take prior action.
The down side is that obviously you have no idea how much prices are going to fall.
Of course it is disheartening to see profits lost, but that is trading, always has been and I’m sure always will be. Stock prices don’t go up in a straight line.
So what do you do?
How you act on the information the charts give is entirely down to you… You can close everything, sell half of everything, wait for the crossovers, do nothing, go short everything… Ask a friend, ask a forum and on and on.
But the soundest advice I have heard and will relay to you is, “don’t panic”!
Think about my portfolio for a minute; you have to take into account that many shares or positions that I have been long on were way up in profits, in some cases 20-30% +.
Yes now they may be at 10-20% profit but it’s still a profit.
Others I lost on but had some insurance in place [short positions]
Overall this year I’m still up and well in profit. Yes I’m gutted that I have had to take some hits, they will always hurt, but on you go if you want to continue to make money trading.
I feel sorry for people that lose money, even though that’s the name of the game [you win some you lose some] but I feel even sorrier for the traders that are trying to work things out for themselves. They’ve got hell of a job of analysis on their hands.
And then I feel even sorrier for those that are following advice from someone who probably isn’t even a trader themselves!
For the newbie trader, this is all BS; it’s the evidence needed to confirm their assumptions that this is a mugs game and many will go away thinking that you can’t make money trading.
But that’s a fools approach. This isn’t a crash and many positions will recover. Plus if you follow sound advice from people that genuinely want you to make money and actually know how to make it for their portfolios, you’ll more than survive, you’ll profit.
It’s how you look at the big picture
Out of any market correction, adversity, crash or whatever global bust you want to call it, one thing is for sure… There’s opportunity to be had. It boils down to how you look at it all.
If you try trading the sports or horse racing, these crashes can happen a few times a day yet the good traders still profit.
Trading racing markets is like cramming a trading year into a day. But know one batters an eyelid at those losses. Because it’s so quick is the main reason.
If you have a crash in the racing markets, 10 minutes later you could be in a bull market [a winning trade], then a crash on the next race and then bull market after bull market then another crash. But at the end of play you’ll be in profit.
It’s just the time frame involved in trading that seems to magnify or contract the trader’s emotional balance.
Long term trend traders make steady gains with the odd windfall. Occasionally they take a larger loss and then normality resumes.
Follow the signals
As I said at the beginning of this post, the signals given by the Vince Stanzione system are pretty accurate. Not 100% of course, but certainly capable of consistently giving you an edge.
Here’s another of my recent short trades; This is on the DJI; again you can see the signal was given weeks before the slump. Overall these short trades have helped balance things out nicely.