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- đşWhy Aren't You Following The "BIG GUYS"?
đşWhy Aren't You Following The "BIG GUYS"?
Here's why they were buying the dip...
Hey there! My name is Jordan and I write about trading for the WOLF Financial newsletter. If you are looking for more trading tips and tricks I guarantee youâll enjoy my content on đ, @AceTheKidTA. Thanks for reading!
This service is for general informational and educational purposes only and is not intended to constitute legal, tax, accounting, or investment advice. These are my opinions and observations only. I am not a financial advisor.
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What a crazy market is been over the past few weeks with bulls heavily buying this dip.
Most people probably chased the market short while the âBIG GUYSâ were buying up the dip.
Why were they buying?
Because professional traders would rather die than fade the long-term trend, what do I do?
The same exact thing.
I will always fade the short-term trend for the long-term term trend especially when swing trading.
Day trading can be a little different as direction will change way more often.
$SPY Weekly
Taking a look at the weekly chart on $SPY, you can see that since October 2023 lows we have held the weekly 21 EMA on every single dip.
Now could you have made money on those dips playing puts for the short term?
Absolutely, but IMO that is really for more advanced investors that have years of experience in this market.
A lot of the time the guys with tons of experience wonât even fade the long-term trend, so if youâre a new trader you definitely shouldnât.
Iâve also found that when trying to play these longer-term trends, it helps to buy dips or shorting pops versus trying to buy breakouts/breakdowns.
Easier to manage risk and get better entries at least for me, everybody is different.
Why Should You Trade The Long-Term Trend?
Trading the long-term trend ensures a higher probability of your trade. Itâs like trying to swing against a current versus with it.
You can fight against the current and make it to shore, but itâs going to be much harder than if you were swimming with the current.
This also leads me to mention avoiding long-term consolidation.
You want to buy dips on names that are in a strong long-term trend, not names that are trying to find a direction on the daily/weekly.
Especially if you trade alongside me with my EMA strategy, this will NOT work well if you are trading names in high time frame consolidation. They need to be trending, short-term consolidation for the next leg up or down is okay.
Along with everything I mentioned, trading with the trend just makes the process so much more stress-free.
Trading is already stressful and difficult, no need to make it worse.
I hope this information helps you guys with your trading and maybe opens some eyes.
Thanks for reading.
-Jordan
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