|Getting a boost?|
When one uses technical analysis, you have to recognize that it can work against you depending upon your own biases and emotion. A very savvy trader once told me that "Kli....you cannot be too greedy but there is also a time that you MUST be greedy".... That of course seems to be contradictory on the surface but further analysis of the "wave" theory provides some insight. For instance, in 2008 precious metals were destroyed in a massive down wave that crushed most traders other than the most stalwart participants. The knowledgeable traders know that oversold conditions in the extreme are to be bought or "added" to especially if they reach historic levels on the technical indicator such as RSI MACD etc. Of course Nature's law will be obeyed regarding for every action there is an opposite and equal reaction and this is where the sage advice of the trader saying there is a time where one MUST exercise greed. What that is saying is getting off of the ultimate rebound wave too early after the killer wave has passed will result in an enormous ride missed. Very few retail traders have this discipline.
Many believe that waves reflect herd behavior......I disagree.....waves are used to create herd behavior....that is a huge difference and you can use this knowledge in your own investment themes. We've gone through a very long killer bear wave in PM miners and it may be over....only time will tell.....but a series of higher highs and lows are forming in the "waves".......so hang on but some small profit taking is never a "bad" thing....or even trading on the margin of your positions...on the other hand the words of the jackal always linger...."sometimes you have to be greedy" ....He said that is part of "Controlling your emotions too".......gl