Is it time to start selling stocks?

[Stoney_21]

what are the chances of a crash in 2016? i have a nice portfolio of good stocks but am thinking of trimming my load and having extra $ for the next crash. curious to see what everyone is doing now

 

[ThePR0]

The time for this already has long come.

 

[AeonTrading]

The same chance there is in predicting a crash in 2016...

 

[dbphoenix]

what are the chances of a crash in 2016? i have a nice portfolio of good stocks but am thinking of trimming my load and having extra $ for the next crash. curious to see what everyone is doing now

Depends on how one defines "crash". Since I posted this in December, we've dropped 600+ NQ points.

Knowing when to sell is just as important as knowing when to buy (some would say more so). Some of your stocks may be fine. Some may not. If you don't know how to spot weakness, learn quick.

Db

 

[Bowgett]

I don't think so. My feel is that the market found some medium term bottom and will go higher for a few month from here.

 

[f2calv]

If/when s&p kisses 2000 (within the next fortnight or less) its time to get seriously short again imo
Alternatively buy yourself an inverse leveraged etf (or two) to hedge against calamity.

 

[zaysev36]

Depends on how one defines "crash". Since I posted this in December, we've dropped 600+ NQ points.

Knowing when to sell is just as important as knowing when to buy (some would say more so). Some of your stocks may be fine. Some may not. If you don't know how to spot weakness, learn quick.

Db

What stocks exatcly are you talking about? Could you give an example? I'm curious how one can predict "crashy" situation and what clues should he focus on to do so.

 

[rahula]

What stocks exatcly are you talking about? Could you give an example? I'm curious how one can predict "crashy" situation and what clues should he focus on to do so.

It is possible to "predict", either in terms of fundamental or technical analysis. For example, "U.S Treasury deciding to raise interest rate by 0.5% every year from 2014" is a sign that most investors (especially those market makers that rely on margin) would like to reduce their positions, which will lead to a sharp decline in Dow Jones index. Also, you may look for technical signals, such as a breakdown of an important support, to alert yourself that a market crash is ready to start. However, the accuracy of these "predictions" is disappointing. From the many trading books I've read and my personal experience in the market, I am confident to conclude that no one had successfully predicted every market crash in the past, and none will in the future (this statement excludes people who have supernatural abilities).
To be honest, you do not have to know everything in order to make money in the financial markets. As individual traders, we do not have the edge that fund managers/market speculators do have, and knowing too much can do much more harm than good. Imagine yourself setting in front of a computer keep worrying about the rumor that "the market is going to crash tomorrow", but after selling all your positions, a huge rally just takes its course!! There is really nothing more painful/unbearable than that!!

 

[dbphoenix]

What stocks exatcly are you talking about? Could you give an example? I'm curious how one can predict "crashy" situation and what clues should he focus on to do so.

I don't know what stocks Stoney_21 was referring to, but it makes no difference. The process is always the same, whether stocks, commodities, bonds, options, futures, etc. But as to your question, the answer depends on how much you want to read. Perhaps the simplest and briefest but most comprehensive answer I can offer can be found here. It all stems from and centers around the balance between demand and supply. Few amateur traders are concerned with this. Professionals are concerned with little else.

Coincidentally, I've begun a thread which is devoted to just this topic. It may be of interest to you.

Db

 

[zaysev36]

It is possible to "predict", either in terms of fundamental or technical analysis. For example, "U.S Treasury deciding to raise interest rate by 0.5% every year from 2014" is a sign that most investors (especially those market makers that rely on margin) would like to reduce their positions, which will lead to a sharp decline in Dow Jones index. Also, you may look for technical signals, such as a breakdown of an important support, to alert yourself that a market crash is ready to start. However, the accuracy of these "predictions" is disappointing. From the many trading books I've read and my personal experience in the market, I am confident to conclude that no one had successfully predicted every market crash in the past, and none will in the future (this statement excludes people who have supernatural abilities).
To be honest, you do not have to know everything in order to make money in the financial markets. As individual traders, we do not have the edge that fund managers/market speculators do have, and knowing too much can do much more harm than good. Imagine yourself setting in front of a computer keep worrying about the rumor that "the market is going to crash tomorrow", but after selling all your positions, a huge rally just takes its course!! There is really nothing more painful/unbearable than that!!

So basically it is possible to predict future market situation... But not quite correctly? Then what is the point of analizing and studiyng tendencies? One could just gamble around a bit and earn a fortune?

 

[zaysev36]

I don't know what stocks Stoney_21 was referring to, but it makes no difference. The process is always the same, whether stocks, commodities, bonds, options, futures, etc. But as to your question, the answer depends on how much you want to read. Perhaps the simplest and briefest but most comprehensive answer I can offer can be found here. It all stems from and centers around the balance between demand and supply. Few amateur traders are concerned with this. Professionals are concerned with little else.

Coincidentally, I've begun a thread which is devoted to just this topic. It may be of interest to you.

Db

Wow thank you for all the info and links! I know what will I be reading for next couple of days in my freetime But I have one last question for now if you don't mind. In your opinion, what is the reason that lots of brokers and traders failing to meet their expectations? Is it due to them unwilling to learn and spend enough time on this business, or is it the objective result of unpredictable nature of the market?

 

[dbphoenix]

Wow thank you for all the info and links! I know what will I be reading for next couple of days in my freetime But I have one last question for now if you don't mind. In your opinion, what is the reason that lots of brokers and traders failing to meet their expectations? Is it due to them unwilling to learn and spend enough time on this business, or is it the objective result of unpredictable nature of the market?

Don't know what you mean by brokers failing to meet their expectations (traders' expectations?), but traders fail to meet their own expectations because they don't take the time to learn their business, that is learning how markets work.

It seems clear -- and has seemed clear for some time now -- that schools no longer teach students how to conduct simple experiments. Therefore, students don't learn how to observe, much less select what to observe. Instead they just jump in and hope for the best, believing that they're so exceptional that they don't need to bother with details like when and how to enter and exit, relying instead on the red and green lines to cross each other, or for the "candle" to provide some sort of signal.

As for the unpredictability of the market, yes, it is. The outcome of any given trade is unknowable. However, that does not mean that over a series of trades one has no idea of the probability of success. This is where the observation and testing come in. If one knows, for example, that shorting a lower high will lead to a successful trade X times out of Y occurrences, then he has the beginnings of a reliable setup. If he also learns how to incorporate context into that lower high and increases the incidences of successful trades, even better.

But few want to do this. They'll either park themselves in a trading room or enter when the red line crosses the green line.

Db

 

[zaysev36]

Don't know what you mean by brokers failing to meet their expectations (traders' expectations?), but traders fail to meet their own expectations because they don't take the time to learn their business, that is learning how markets work.

It seems clear -- and has seemed clear for some time now -- that schools no longer teach students how to conduct simple experiments. Therefore, students don't learn how to observe, much less select what to observe. Instead they just jump in and hope for the best, believing that they're so exceptional that they don't need to bother with details like when and how to enter and exit, relying instead on the red and green lines to cross each other, or for the "candle" to provide some sort of signal.

As for the unpredictability of the market, yes, it is. The outcome of any given trade is unknowable. However, that does not mean that over a series of trades one has no idea of the probability of success. This is where the observation and testing come in. If one knows, for example, that shorting a lower high will lead to a successful trade X times out of Y occurrences, then he has the beginnings of a reliable setup. If he also learns how to incorporate context into that lower high and increases the incidences of successful trades, even better.

But few want to do this. They'll either park themselves in a trading room or enter when the red line crosses the green line.

Db

Well, I guess no one would argue that education system seems to not keeping pace with what is required nowadays from it. That's where self-education comes in hand, and that's what I'm trying to do now

So your way is kind of low start and probing the market? Not sure what you mean by "parking in a trading room" though.

 

[dbphoenix]

Well, I guess no one would argue that education system seems to not keeping pace with what is required nowadays from it. That's where self-education comes in hand, and that's what I'm trying to do now

So your way is kind of low start and probing the market? Not sure what you mean by "parking in a trading room" though.

I appear to be involved in two parallel threads here. Read this post and it may answer your basic questions.

And if you don't know what a trading room is, consider yourself fortunate. You don't need them. Nor do you need to take a course. Nor do you need expensive software or trading platforms. In fact you can assemble a consistently-profitable trading system without spending a dime.

Db

 

[Pat494]

If you an intraday trader you will be in or out in plenty of time. The longer the TF you use the later you are likely to spot a big move. It will have moved already. So get your TF right for the stock you are interested in.
Draw in the trend lines and you have a viable system.