Thursday, January 25, 2007

>The Power of NOW

As a person who is slowly gaining a reputation for timing the markets, I'm constantly now asked three questions:

1. When is the next turn window?
2. Is it going to be a high or a low?

As we get close and emotions take over in the prevailing trend...
3. What if it doesn't turn?

These are fair questions and the ability to time markets gives one a tremendous edge but if one isn't careful you can fall into a dangerous mental trap. While we are all interested to know what tomorrow, next week or next month will bring; the truth is we live in the present.

One thing is true for all of us, we have a finite amount of moments on this planet. That's why it's vitally important to live in the present. None of us know which one will be our last. I believe too many people spend an inordinate amount of mental energy living in the past or worrying about the future. Don't get me wrong, I have fond memories that bring pleasure just like the next guy. I also have painful past experiences I'd rather forget. We all do. What I've also found is many of the things we worry about in the future never seem to come to pass.

I do have an idea when the turn windows are because we have a methodology that projects from one pivot to the next. It's not rocket science although some think it is. We never really know if it will produce a high or low until we get close. Finally, in a strong trend market, if the chart chooses to ignore the turn window, that is valuable new information as well.

So the anti-me is suggesting to be aware of the turn windows but we need to always live in the present. Why? Mark Douglas suggests that financial markets have the unique ability to provide us with interesting opportunities all the time. What happens is a market could be in a sideways consolidation or even a triangle. It seemingly bores us to sleep, even to the point that we come to believe the pattern is NEVER going to change. But suddenly 47, 55, 76 or whatever time period elapses and the market is ready to go. Let's just say your favorite chart just completed a 47 bar correction either in 15-min, hours or days and bar 48 is the largest candle you've seen (bull or bear). The market is providing you with a unique opportunity to do something RIGHT NOW. This particular opportunity may not have been there yesterday and the same one may not be available tomorrow. The market doesn't care if you've lost on five trades in a row and are down on yourself or have been on a huge winning streak. This particular opportunity will never present itself again and if you fail to act it could be you passing up a bucket of money.
Douglas also warns us against being a know it all. We can have an idea what will happen but we can outsmart ourselves. After all, the market can surprise us and go much further than we anticipate.

Some of you may go prematurely short in an uptrend or try to catch a bottom in a downtrend because you believe the turn window is only a few days away so you try to catch it in advance. My question to you is what happens if the market elects to bypass the turn window? You can lose a boatload of money in the process. My answer is to want what the market wants. We just covered that concept last week. Since we are dealing with leading indicators we want to let the market be our guide. If we are still putting in white candles in an uptrend, that happens to be the present moment. When we finally do get the bearish engulfing bar or whatever reversal signal you use, it is only then we should act. Why? The reversal signal also happens to be the present moment.

I know that nobody in THIS readership is guilty but there are plenty of market participants who hold losing positions way beyond the point where the stop loss would have been in hopes the chart will come back. Friends, that's not living in the present. To hope for an outcome despite mountains of evidence to the contrary is living in a fantasy land. I know, it's not a loss until you actually press the little button on your trading platform the says S-E-L-L. Tell it to the people who owned Enron or Worldcom.

Eckhart Tolle's, "The Power Of Now" is a spiritual guide where he talks about the stillness and the power of coming in touch with a 'presence' or 'being' which actually can be interpreted as the higher power of our understanding. If you get in the habit of constantly living in the moment, you can eliminate much of the chatter in your mind. Most of that chatter deprecates you because that little voice tells says you aren't good enough, rich enough or smart enough. If you can take it that far, great! Most of us are working on it. We covered Carlstedt where we learned that entering the zone of achievement can be best reached by the power of relaxation. It certainly helps to get relaxed when we don't concentrate on the past or worry about the future. As you can see, living in the moment is a prerequisite for getting in the zone.
We have to realize that our lives are just a series of present moments. As human beings we have the unique skill of projecting into the future as well as the past. This is our blessing and our curse. Animals live and think in the present. Obviously, the trade you don't make may be the equivalent of letting money drop to the floor. But this applies to other areas of our life as well. Some of us don't seem to realize that our seemingly innocent actions in the present can have profound reactions in the long term. If you need to lose weight, it may be better to pass up that one thousand calorie/forty grams of fat piece of chocolate cheesecake. You may get instant gratification but you can also end up with high cholesterol, high blood sugar or much worse. If you smoke cigarettes, you may not think much of it today, but in 20 years you could get lung cancer. When we live in the moment we want to make the best decisions that will affect our lives now but also be aware there are implications for the things we decide to do or not do. Life also offers us unique opportunities to get into the zone of health. This concept goes way beyond the stock market and applies to all areas of our lives.

Edited By Jeff Greenblatt

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