Carrying on from my post last week about combining fundamental and technical views, I have been thinking about what should count as an argument for trading or not trading. I am still considering adopting the method I suggested in the earlier post of trading every breakout in a trending market until I get into it.
Arguments for trading
- There is a trend OR a trend is beginning (fundamental or technical argument, or both).
- AND there is a short-term technical signal.
- There is no trend.
- Trend is old OR trend may be turning.
- Signals do not work in the market concerned.
- Major resistance (e.g. top of a range) in the way of the profit target.
- Trade would give too much exposure to a risk factor.
- Upcoming data risk.
Update: I should also ask, explicitly:
- What would be good news, and what would happen?
- What would be bad news, and what would happen?