The first step of any good trading plan is to understand what you are going to do depending on what the current market environment is. From my experience the two hardest trading environments are sideways and when the market does a transition move. These are the times I have thelargestdrawdown in my account. So to include as part of my trading plan seems to be a critical part. Over the next few days I will do a review of when the has gone through these type of conditions. I will be using the “Existing Trends” chart for the Worden Report.
Here is an example.
My study needs to see what the normal conditions that set up before these two type of market condition kick into place. A bigger question is what do I do to my position size during these times. One idea is to cut my given position size in half. Maybe only cut it down by a quarter if the industry group is in a clearer trend. Just a few notes on where my mind is on this issue.
It would seem that a big clue is going to have the Primary and Intermediate Trends are the opposite of the Sub-Intermediate and Short-Term Trends. Like we have in this example. This is from today’s report. I’m sure that anyone who was short or trying to get short over the past few days has an understanding of what I mean.
