The fastest money is made in the shortest time provided you are prepared to grab the opportunity when it comes.Its a statistical observation that markets are trended 20% of the time and are rangebound for the rest 80%.A rally is based on impulse, fear and greed and the combinations of these emotions in varying degrees.
Impulse, fear and greed mark market inefficiency and thats what the professionals make money out of.Professionals trade set ups. A set up being a certain set of conditions which describe their criteria for entering a trade.
Technical Analysis works for you if you are patient enough to wait for a trade set up. Rangebound markets are the recoil of a gun after it has shot a bullet. Markets absorb the inefficiency and start gearing up for the next move. This is a zone for highly professional traders. The impact costs,slippages and commissions are high and the margins are low.
We are entering such a zone and its time to take profits off the table or trail your positions with tight stoplosses.We can definitely head higher from here but trading above 5200 is a zone for abnormality.Drive the F1 car only if you can jump out on the first wrong turn!
Attached above is a chart of the BSE Sensex, the yellow boxes showing the moves on impulse. The market gives you ample opportunities on breakout of ranges and retesting of bottoms.
If there is further upside, why is it good to take some profits off the table? Because, humans by nature tend to move in a herd since ancient times. We like to be part of groups and group opinions take time to change.By the time you have made peace with the fact that you have been caught on the wrong side, the move is nearing bottom.So be alert and be cautious.
Have a great trading day,
Regards,
Rahul T.
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