A funeral for trading cliches.

Many financial writers and commentators feel the need to dumb down their analysis. Dumbing down leads to wide spread adoption at the cost of effectiveness. Just because you shorted the market at 8:40 yesterday does not mean it smart to short it every day at 8:40, right. The market changes so should the catch phrases, get creative please. The following are the most egregious offenders.

The Trend is your Friend

No it is not, it is the cool kid who does not let you sit with her at lunch. The trend is the person who convinces you to get a lower back tattoo and laughs at you. The trend convinces you it is ok for a man to drink strawberry margaritas with a sugar ring, it is not. The trend is not after your best interest, unless you start it. If you rely solely on a trend you are always wondering if it will be there in the morning. Eventually it will disappear, taking your Sega Genesis with it.

Never Short a Slow/Dull Market

I imagine this was started in a bull market, along with all of the others. The market will return to where it came from if there is no volume. In terms of market mechanics, the market is rejecting the prices. This will lead to puking; make sure you do not get any on your shoes.

Sell in May Go Away

The market is or is becoming a 24hr business. There are no summer vacations. There are no seasonal markets anymore, you can blame that on unscrupulous brokers that bought oil futures for Joe in the summer and natural gas in the winter. The market moves on news and news can happen at any time.

Buy the Rumor, Sell the News

This may have been true when news was hard to get. Trading on news, rumor, is a gamble. It is not a consistent trading technique. Stocks may be different. But why do the same reports cause the market to act differently. You have to synthesis why you are getting the rumor. Then guess how many other people have this knowledge and how the others will react. Too much guessing for me.

Everything is cyclical and these clichés may work again. But for the time being please stop regurgitating the same stuff. Find some new ones. Here are my suggestions:

The trend was your friend.
Don’t expect a breakout in a slow market.
Sell when your system says to sell.
Rumor is the news.

Here are my less serious suggestions:

The trend changes more than OJ’s friends.
Never sell a slow market, unless you like the feeling of your soul grinded away slowly.
Sell in May, sell possessions in June. (I may have stole this.)
Buy the rumor, sell your house.

Special thanks to @chicagosean for his help compiling the list. Check out his blog here. As I get more I will add to more.

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3 Responses to A funeral for trading cliches.

  1. […] This post was mentioned on Twitter by Eli Radke, trader habits. trader habits said: A funeral for trading cliches. http://dlvr.it/377td […]

  2. chicagosean says:

    Thanks for the shoutout! Great piece. Do you work in the loop? If so, let's meet for lunch next time I'm down.

  3. traderhabits says:

    No problem thanks for your help.

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