Surprised? …to read “Train”, “Jellyfish” & “Stock trend” in a row?

All three of them have some qualities in common. Let’s check them one by one.

The Train.

Before starting the journey in one direction, the train keeps blowing the horn, as if asking everyone to take position!

The Train doesn’t stop immediately once it starts in one direction. Nobody dares to stand in front of it (unless somebody wishes to commit suicide!). If you are inside the train, no matter how heavy you are, train will carry you with it. The power of train is always more than anybody inside it.

Now, some qualities of the Jellyfish.

We know the Jelly fish floats with the water, and never crashes to the bottom. Also, it never comes on the surface of the water to become food for some hungry bird. Although it looks fragile and brainless, it takes advantage of different undercurrents of water and it keeps moving, effortlessly. Swiftly changes with undercurrents. This quality of the Jelly fish reminds me of a Swing trader!

Now, the stock market trend.

The Stock market trend, once set in a direction, up or down, it remains in that direction till the direction is not changed to the opposite. Just as a train, the stock trend also starts with big volume and heavy trading. Tremendous change is seen in the sentiments of market participants at the beginning of a trend. Strong trends frequently pause for few hours or days, just to continue in the direction of the trend. As soon as you confirm the change in the direction of the trend, take position in that direction (just as if you were the Jelly fish taking advantage of the changing water undercurrent!).

Trading against trend is dangerous. In long term, it takes you to a large number of losing trades. Big drawdown. (Stay with the trend and the trend will carry you with it just like the train, no matter how heavy you are.)

All three examples are teaching us the following rules

Trend is a friend.

Take profit slowly.

Trend lasts longer than we feel, though there is never a permanent uptrend or downtrend.

Trend doesn’t change everyday.

Pause in the trend is a part of the trend.

Protect your Profit.

Cut losses at once.