4 Schools of Trading

The majority of professional traders use one or more of the following four schools of trading:

1. Fundamental Analysis: reading the books, P/E ratios, dividends, etc
   
2. Technology Analysis: charts, higher highs and higher lows.
   
3. Structural Analysis: Macro conditions, global demands, local demands, law and regulations.
   
4. Psychological Analysis: emotions
   

there is no sure way to be profitable in trading, because if everyone figure out the way to make money in every trade, the market will figured it out and collapse on its own.

What happened this week is emotion plus fundamentals. The sell off could not be just because of the short-sellers, those are real sell off as the big money figured out the new target of each financial stocks when things unfold. On top of that emotions overcome many small investors.

My favorite school of thoughts is technically analysis. I am always late to the party, but I go for high probability. I only need to make the middle 60%. "Professional Gamblers go in when the odds are on THEIR side".

So which is the chart telling me, nothing, except the extreme volatility, usually at the extremes of the market.

I will watch the financial, GS, MS, BAC, WFC, and such, I want to see a higher low formed and then enter the trade with a reasonable stop. Remember my motto is getting the middle 60%.

shorts: waiting
longs: licking my chops, waiting for the opportunity

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