I received a question from a mentoring client a few days ago asking my opinion about shorting the Nasdaq.


Long Answer:

If you want to be a trader your goal has to be to develop a Trade Plan that has a positive expectancy. The requirements for developing a Trade Plan with a positive expectancy include:

  • Having a valid methodology
  • Identifying trade set-ups using that methodology
  • Meticulously recording the details and results of each trade
  • Reviewing the metrics derived from your trade records
  • Adjusting and refining the Trade plan based on the above
  • Doing this over and over

Achieving your potential as a trader is THAT “Simple”.

Auction Market Principles provide a real time view of Market Development. It makes no assumptions about “overbought and oversold” (even writing those two terms is like fingernails on a blackboard to me). Auction Market Principles precludes caring about what is said on a financial new channel, or who said it. It precludes checking out the thousands of opinions about markets, stocks, commodities, etc., that can be found on the internet.

What is most difficult about Auction Market Principles is simply learning to “avoid the noise”. The understanding of Market Development through the lens of Auction Market Principles requires letting go of a trading lifetime of looking outside the market for answers about the market. The market, and its present state, IS the REALITY. You must trade reality, not assumptions – yours or anyone else’s – if you are going to succeed as a trader.

Auction Market Principles allow one to become their own expert. If you are going to succeed you have to accept this and work toward being an expert.

So, what in the “H” does this have to do with whether or not one should be shorting the Nasdaq or other indices? If you have taken my courses or even if you have just been subscribing as a member and watching/reading Trade Lessons and reports you should be able to answer this yourself. Here are a few questions you may want to consider as you find the answer for yourself:

  • What are the two phases of Market Development?
  • In what stage of Market Development is the Nasdaq?
  • In what timeframes?
  • How mature is the present phase of Market Development across various timeframes?
  • What is the typical transition from one phase of Market Development to another?
  • What does this process typically look like, and how long does it take?
  • If one goes long the Nasdaq at present levels what is a reasonable target and why, and where must an initial stop be placed?
  • If one goes short the Nasdaq at present levels what is a reasonable target and why, and where must the initial stop be place.
  • Is there an immediate trade set-up in the Nasdaq at present, long or short and in any timeframe?

If those questions aren’t part of your screening for opportunity you have some work to do.

If you can’t answer the above questions in five minutes or less you probably shouldn’t be trading until you can answer them in five minutes or less.

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