A couple weeks ago we used the adage “don’t catch a falling knife”. It led me into a rabbit hole to find out if these things are actually useful. In this example, it really was. Keith Harwood pointed out that Microsoft had egg on its face after some bad press about its AI launch. The price was falling pretty quick. His point was to wait it out, let the knife stick in the ground, so to speak, and then grab a trade. Or if you felt confortable, short it. Take a look at what happened next.
You can see that it did find support and then recover. The riskier play of shorting it probably wouldn’t have ended well. So in this case, it was right. But don’t let that fool you.
If you look at a long list of trading quotes and adages, they all try to simplify and standardize what is really complex. That just doesn’t work consistently. Sure it may remind you of a fundamental truth of the market but they are usually vague and subjective. At the end of the day, what works for one trader may not work for others. This leads to the absolute best way to use them when trading.
Create your own quotes and adages. Find what works for you and create reminders to help you remember them. They are basically your trading rules. Keep them as simple as possible and periodically verify that they still work. The best part is, unlike all of the gurus, your quotes only have to make sense to you.
Keep learning and trade wisely,
John Boyer
Editor
Market Wealth Daily
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