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Steenbarger: Principles of Market Psychology

Dr Steenbarger follows up his previous post “Five Guiding Principles of Trading Psychology” with a related one - “Five Guiding Principles of Short-Term Trading”. The 5 principles:

  1. Markets are moved by their largest participants.
  2. Trends are created by shifts in supply/demand generated by global/macro relationships.
  3. Market moves on strong momentum tend to persist in the short run; moves on weak momentum tend to reverse.
  4. There are only three kinds of trades: breakout trades, trend-following trades, and reversal trades.
  5. Tracking market activity at the bid and offer is useful in detecting shifts in short-term demand and supply.

This entry was posted on Monday, February 26th, 2007 at 10:04 am and is filed under education. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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