9 truths about the stock markets and trading

1. Stocks prices always move in cycles. Periods outside those cycles are usually swift and powerful

2. There is a very high correlation between stocks during big selloffs and during the initial stage of recovery. In general, correlation is high in bear markets.

3. Try to trade only with the direction of the main movement. It is now only the path with least obstacles, but also provides the best profits. Have a simple method to identify the trend.

4. Being wrong is not a choice. Staying wrong is.

5. The market conditions will never be perfect and when they seem to be so it is a good idea to decrease your exposure and take some profits. With that said, there’s no need to stay in the market all of the time. When you don’t see a good setup, just watch from the sidelines.

6. If you understand the incentives of the major market players, you can predict their behavior. Technical analysis serves for just that.

7. Your first loss will be your best loss. No one is right all of the time and there is no reason to be. Big market players make ton of profits by being right only 30% of the time.

8. Optimism and pessimism are contagious. Investors often lose logic and become emotional. The news media and the recent price action signal play an important role of developing such moods.

9. It doesn’t matter how smart you are, how ingenious your idea is or how cheap the stock is – if the market doesn’t agree with you, you will not get paid. Period.