Stats are fun, don’t be a Statistic
I certainly watched (and listened) to too much TV today. mostly CNBC. After this week on the stream and today’s TV, it occurred to me we should beware of how we use statistics. Sure they are fun and in many cases useful to keep in mind. Many traders use them as a guide for their trading or concentration through seasonality and other measures. CNBC uses them as flashy headlines and something to gnaw on…constantly.
All of this is fine, but I also want to warn newer traders to make sure those statistics know their place. Don’t let them direct your trading as much as they might direct your research. That said, I love the numbers put out by Ryan Detrick ( @RyanDetrick) , Rob Hanna ( @QuantEdges) and others. I greatly respect their work and always consider their messages, but at the end of the day it is price action that dictates what happens with my trades.
Currently we are breaking new highs and many other statistics. Many are arguing that means we are in for bigger trouble coming soon. I could just as easily argue that these are aspects of strength based on where we are coming from. It doesn’t really matter what we argue, the price action will tell us when to sell based on our trade plan. Until then, the trend is higher, many charts have set up again and have my attention. Yes, without a meaningful pullback… If you make your trades based solely on statistics you might just one day become a statistic yourself. No matter how you come up with your idea, make a trade plan an follow it.
Good Luck, it is there for the making!
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