Friday, November 28, 2014

Buffer and turbulence

How often can we sit and wait? How often are we mentally and emotionally wreck when we see the red numbers appearing? How often when a decision to exit with losses only result in market turning back to our earlier expectation?

The problems is mentally we are conditioned not to accept red numbers. A lot of this deals with our game plan. The ability to weather storms like this is not for everyone. The ability to sit tight and wait must be base on proper plan and strategy.

1. The confidence that when positions are initiated, it must be close to the TOP if SHORTS  and BOTTOM for LONGS. There must be sufficient buffer during this period.

2. When SHORT positions are accumulated mid-way rebound in a major downtrend, one must be able to verify that it is a temporary rebound and sufficient buffer to withstand until the downtrend resume or LONG positions are taken mid-way correction in a major uptrend, you must be sure that this is a temporary trend change with buffer to hold on to a temporary down draft until the uptrend resume.

3. Never over-gear your positions until you got no buffer to withstand all these temporary turbulence.

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