(Watch the Video Online: Market coach Doug Hirschhorn, PhD, advises traders to stick to their shorts for the time being.)
This week’s trading plan should be to stick with your shorts. The top traders on the Street have spent the past couple months positioning themselves for a 10- to 15-percent correction. As their coach, I can tell you it’s rare for these Wall Street titans to be wrong for so long. What does that mean to me? That it’s time to remember three important rules:
- Trust your original thesis Just because the market doesn’t respond in the time frame you prefer does not mean your trade thesis is wrong. More times than not, it just means you were early to the party. So stick around because it’s about to get good.
- Patience is the key to bigger profits When the market starts to sell off over the next few weeks, don’t rush to buy back your shorts and take small profits, like everyone else. If you’re looking for that 10- to 15-percent sell off, have the patience to stick with the trade and endure the pains that precede your gains.
- Stay objective Forget about how long you’ve had the trade on. When the market starts to sell off, ask yourself one simple question: “If I had no trade on right now, what would I do?”
That’s what I call calibrating your trading mindset. If you want to trade like the elite, you have to think like the elite.
Think better, invest smarter.
