Wednesday, 13 February 2008

Top Down Trading

Top Down Trading consists of 1) looking at the overall market. Are you in the early or late stage of a bull market? Is the market acting strongly or starting to weaken? How are the DOW, S&P500, and NASDAQ acting? Which index is leading the market and which one is lagging? 2) The INDUSTRY GROUP is the next area of importance in Top Down Trading. Check the industry you are considering a trade in. If you are looking at a trade in Transocean (RIG) check out the Oil-Drilling Group. Is a leading industry in the market or a laggard? 3) Tandem Trading: Stocks within the same industry (Sister Stocks) should be moving together confirming the trend of the overall group 4) Finally, take a look at the stock you are considering a trade in. Make sure all of the steps are all confirming the direction of your desired trade. Once you have done all this, make sure you do the necessary homework to follow your stock.

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