What to do when you are wrong…

Two weeks ago, I posted a story predicting the market would take a breather before going higher. This time, the prediction was wrong as the market continued the march higher reaching nearly 4200 (for S&P 500). So now we have a real example of market being difficult to time as per the trading principles)!

What to do in this case? Well after it becomes obvious that your prediction has proven incorrect, you should follow the trend and accept you are wrong! I also reluctantly ended up buying and gaining from the rise. It was much lesser than I could have though! (since the market was so overbought already)

What not to do? What is absolutely wrong is to fanatically follow your theory and take the other side (e.g. short the market).

Acceptance of the unpredictability and the trading principles is the mantra!

Q) So what’s next? Should I wait for the next big dip ti buy again?

A) Yes you certainly could, in fact we did see an intraday blip on Thursday with some sharp selling, only to be reversed with S&P hitting fresh highs on Friday.

But a better option would be following the trend and putting (at least some of) your money betting on a market rise. The market setup still looks amazingly bullish and who knows a S&P 4500 may be sooner than you think!

Enjoy the EZMoney!