Rules number 1, 2, and 3: Don’t Lose Money
(This post was emailed to email list subscribers 4/17/2024)
Quick note to follow up on my email from two days ago. As I said then the QQQs, or Nasdaq as most know it was close to a tipping point after putting in some very bearish chart patterns, AND having a key indicator, the MACD, go negative.
The QQQs began that rollover today, down over 1% and likely headed a decent amount lower.
Technical indicators are not 100% reliable, no market indicator is, but especially when several indicators come together telling you the same thing, it’s a pretty good idea to at least become cautious. It’s like when they show you ALL the different training Rocky does in each movie…if you knew you were facing THAT guy, a little caution might be in order.
A lot of the traders I know use technical indicators as a way to protect themselves, even if they don’t use indicators regularly in their investing. While I think it’s better to use them more regularly, I definitely won’t argue with the fact that technical indicators and chart patterns can be used to “save your bacon”…or NOT give back hard earned investment and trading gains.
Most people don’t focus nearly as much on Not Losing money as they do on “how much can I make”. That approach is backward to me. My first question is always “How much could I lose in this trade/investment, and where should the stop be.” But, to each his own.
We’ll be discussing the market and where it could possibly roll down to in our Zoom tonight at Trade Your Edge. Hope you got some protection on a few days ago.