The Little Book of Stock Market Cycles: How to Take Advantage of Time-Proven Market Patterns

Chapter Fourteen

Picking the Ripe Trade

When the Season Is Right, Indicators Are Strong, and Timing Is Perfect

The investing highway is littered with the abandoned vehicles of traders who never made it—they either failed to stick to a sensible methodology or never had one to begin with.

Some traders take a hands-off approach to investing by hiring a professional money manager while others actively manage their own funds. You need to find out what makes the markets tick so that you can make better trading and investing decisions whatever your style may be. The strategies discussed in this chapter show how clear and simple it is to recognize that a cycle or pattern is setting up well for a trade, that conditions are ripe, and how to recognize when a technical indicator has given a signal to buy or sell. But first, let’s take a look at just how far we’ve come over the past several decades.

A Chance for the Individual Trader

Back in the old days it was much more difficult to implement trading strategies based on patterns and cycles. The process was limited to large institutions, well-heeled investors, and sophisticated traders. They were the only ones with the capital resources or know-how to set up and fund the complex derivative trading strategies or unit investment trusts required to capitalize on these trends.

But with the advent of exchange traded funds (ETFs), the individual investor or trader has more tools at his fingertips to trade practically any index, sector, commodity, ...