The Yin and the Yang of Markets

I am reading a fantastic book on trading, first published in 1924, by Richard D. Wyckoff, titled "How I Trade and Invest in Stocks & Bonds". Although most of the examples in the book pertain to stocks, the insights into the nature of trading are relevant no matter what instrument you choose to trade.

I am particularly drawn to the authors' appreciation of the ebb and flow nature of markets and how this perspective can be used to great effect.

"It is difficult to over-emphasize the importance of studying the technical position, particularly when making a speculative commitment. Many people may say, "What is a weak or a strong technical position?" My reply is, in brief, that a stock is in a weak technical position on the bull side when it has been purchased and is held by a large number of outside speculators; when most of these are looking for a profit; when the price of the stock has advanced to a point where no further buying can be stimulated for the time being. It stands to reason that when buying power is exhausted a stock must decline, no matter how strong its finances, management or earning power."

"On the other hand, a stock is in a weak technical position on the short side when the bears have exhausted their ammunition by selling all they can afford and when the buying power of investment and speculative purchasers is such that it resists the pressure of the bears; in other words, when demand overcomes supply. The weakness in such a position is found in the fact that all those who are short are potential bulls; they must, sooner or later, cover their commitments in order to close their trades. They do not wish to remain short indefinitely."?. "Bears, after they have sold short are an element of strength, not of weakness."

Perhaps the nature of all markets is best described by the Chinese Yin Yang symbol.

In every bull move, and in every bear decline, are the seeds of their own destruction.

Malcolm Robinson
LIFFE Pit Trader & Electronic Trader
InstinctiveTrader.com

---

PARLOT.COM: Turnkey Money Making websites

Forex Profits

The Forex Market-What, When and Why?Forex, FX and the Forex... Read More

Forex Signal Services

What are Forex signals? Forex signals are paid services offered... Read More

Trading Profitably on the Foreign Exchange Market

You may be asking yourself "how does one begin to... Read More

Dont Deny Reality

If you want to be a successful trader, you must... Read More

The Margin Advantages of Trading FOREX.

There is one aspect that is considered as one of... Read More

Trading Tips No 1: Learn How to Trade The Moment of Truth

So you have learned how to trade the markets by... Read More

Trade Exit - How To Cut Losses And Let Profits Run

Cut your losses short and let your profits run. This... Read More

A Beginner?s Guide to FOREX

FOREX is the abbreviation for the Foreign Exchange market. FOREX... Read More

Forex Trading Can Be Like Day-trading

Forex trading, or foreign currency trading, has become a bit... Read More

Day Trading - Moving Averages vs Support and Resistance

When day trading the SP and Nasdaq futures, do you... Read More

FOREX 101: Make Money with Currency Trading

For those unfamiliar with the term, FOREX (FOReign EXchange market),... Read More

Online Forex Trading

Foreign exchange currency trading is also known as Forex trading,... Read More

Forex Market Overview

"FX" is an abbreviation of "forex" or "foreign exchange." Foreign... Read More

Stock Market Report: Day Trading or Swing Trading Online? Stock Investing Information

Profitable day traders recognize that momentum trading is among the... Read More

Your Mother Could Make Money In Forex Trading

The question would be not whether she could but rather... Read More

Why Hedge Foreign Currency Risk?

International commerce has rapidly increased as the internet has provided... Read More

The Meaning of FOREX Price Charts and How to Use Them

There is one very important factor that you should consider... Read More

What I Learnt Losing £60,000 My First Year as a Full-time Trader

During my first year as a local (independent trader) on... Read More

A Look at Forex Market Makers

The investor in the currency market takes for granted that... Read More

Discovering Turnaround Candidates

There are many types of investment methodology out there. All... Read More

Online Futures Trading - Advantages and Disadvantages

What Is Online Futures Trading?A futures contract is an agreement... Read More

Example of a Profitable Transaction in FOREX

To make a profit, in the FOREX, a trader can... Read More

Forex Broker

A broker is any person or firm that charges a... Read More

Ways to Acquire Discipline in Trading

One way to acquire discipline in trading..."Hey Joe! When you... Read More

Be a Smarter FOREX Currency Trader: Three Basic Principles

Below I will describe three basic principles that may come... Read More