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| When you go to reading the books regarding the speculative markets you learn several things that are considered the truth by most. Then you hang-around and after awhile you'll read a proven pro contradicting some of these truths.
One example of this:
"It is impossible to pick tops and bottoms." Most people consider this to be true. Problem is, according to highly respected pro Paul Tudor Jones, he picks and attempts to pick tops and bottoms all the time. A very important part of his methodology.
Jones says if you don't enter your positions in this manner you have to have your stop-loss way too far from the market which makes for a very high risk-reward ratio.
The trick is--and this is a key word--he PROBES for the top or bottom with a close stop-loss. Gets stopped-out, waits, and probes again. Takes a pro's psychology. You get "knocked-down" and you get right back up and into the frey--ideally without batting an eye.
I suppose you might call it "fishing for position." Yes, I like that!
Don
Edited by getitdone1 2/19/2008 12:04
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Picking tops and bottoms
