Be Patient And Wait For Tradable Patterns
It is the day before the Federal Reserve meeting,
and this is a good enough reason for many traders to sit on the sideline and do
absolutely nothing today. As we know, we don’t have to trade every day. We
should trade only when we see reliable price patterns. Too many traders lose
money unnecessarily because they foolishly force themselves to see patterns in
meaningless shapes on the charts. They are desperate to squeeze a trade out of a
suspicious chart pattern. We have to learn to be patient. Remember, taking
a break is also an important trading strategy. Anyway, the Fed is expected to
cut rates for the seventh time this year at the end of the meeting tomorrow.
A notable chart pattern developed earlier in the morning as you can see below.
The Dow Jones Industrial Average rallied out of a flag on its five-minute chart
around 10:15 a.m. Obviously, some traders and investors were shifting money into
the old economy stocks before the Fed meeting tomorrow, so I decided to check
all component stocks of the Dow.
After quickly studying each chart, I found Eastman Kodak (EK)
was trading near the top of a flag. At 10:25 a.m., the stock broke out of the
pattern and rose 60 cents in less than 25 minutes.
Don’t force yourself to trade. Be patient, and wait for tradable
patterns to develop.