You are a contrary indicator.
Finally a buyable pullback.
- Thread starter failed_trad3r
- Start date
You are a contrary indicator.
The whole idea of 'buying pullbacks' in a bull market is flawed. Waiting for a pullback means you are currently flat. When is it correct to be flat in a bull market?
i) when it's so seriously overextended that's it's virtually a trading short
ii) when the bull market is over
The vast majority of times traders are flat, waiting for a pullback, are NOT one of these two occasions. Traders wait for pullbacks for one reason - because they have psychological aversion to buying at or near new highs. Yet the nature of a bull market is that it will make many, many new highs before it comes to an end. Only one of those highs is the ultimate high, and only a few of them are medium-term highs that are worth selling. The vast majority should be BOUGHT not sold, not stayed flat at.
What normally happens when you wait for a buyable pullback is not that one occurs, but that none takes place, or a smaller one than you expected, and then the market goes even higher without you. By definition, a bull market is more likely to go higher than lower, and rallies tend to be bigger than pullbacks. The odds are usually all wrong to make it worth waiting for a 'buyable pullback'.
i) when it's so seriously overextended that's it's virtually a trading short
ii) when the bull market is over
The vast majority of times traders are flat, waiting for a pullback, are NOT one of these two occasions. Traders wait for pullbacks for one reason - because they have psychological aversion to buying at or near new highs. Yet the nature of a bull market is that it will make many, many new highs before it comes to an end. Only one of those highs is the ultimate high, and only a few of them are medium-term highs that are worth selling. The vast majority should be BOUGHT not sold, not stayed flat at.
What normally happens when you wait for a buyable pullback is not that one occurs, but that none takes place, or a smaller one than you expected, and then the market goes even higher without you. By definition, a bull market is more likely to go higher than lower, and rallies tend to be bigger than pullbacks. The odds are usually all wrong to make it worth waiting for a 'buyable pullback'.
sheesh...I am beginning to think that a buyable pullback will be a signal for a significant turn!
ES
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