Controlling Greed

We have enjoyed tremendous success the past few weeks as assets of all types are finally breaking out after weeks of consolidation.  Stocks in particular have had a tremendous run for months now, but we are now seeing money flow into commodities.  The rally with gold has been even stronger than I could have anticipated.  The destination for gold has been the same but the speed by which we are getting there has been a lot faster than I projected.

I first learned about cycle trading from a guy named Gary Savage who runs a website called the Smart Money Tracker.  Over half of what I know about cycle trading and human behavior around the markets came from him.  That said, the biggest trading mistake by far I ever made I can attribute to him.  I won't go into that now and I don't blame him as I accept responsibility for all my trades but the lessons I learned from him, either good or bad have made me a better trader today and this has helped me as I try to help my customers.  This was Gary and I a few years ago.

Gary produced an excellent video today that I think is worth a few minutes watching.  He masterfully explains the market psychology of a beginning trader and how beginner traders think.  I see these things happening right now with some of my customers.

As a cycle trader, I am better at picking market bottoms than tops.  I think gold is approaching a spot where we will want to exit our positions very soon.  It is becoming time to manage our greed.  The best time to exit a trade is when you believe you have made enough and that is different for every trader.