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The number one stock market rule, the indispensable, go-to rule, the Golden Rule, the only rule to follow even if you're a rules-breaker, is…
The trend is your friend.
If the market's trending up, you play it from the "long" side, meaning you buy and hold stocks, including the whole market in the form of an index ETF.
If the market's trending down, you get out and go "short," meaning you sell the market by selling short an index ETF, or you buy an inverse market ETF that goes up in price when the market goes down.
Making money is easy. The hard part is figuring out whether the trend is turning.
But there are ways to play it safe by being in the game – long or short – and being cautious at the same time.
Now, I've been a raging bull, and I still am bullish. But, all of a sudden, I'm leaning towards heavy caution.
But I'm taking some concrete steps to make sure my readers and I cash in no matter what happens.
You can, too…
I Saw This Coming
Forgive me if I say it, because I'm not the kind of guy who says, "I told you so." But if I was, I'd sure be saying "I told you so" now.
Joking aside, I've been right about the market; I've been all over the financial cable news with bold predictions that have been dead-on right – even when no one else was willing to commit themselves to a guess.
When the Dow Jones was at 19,000 and every analyst and market pro was being asked if it was going to get to 20,000, I said, "Not only will it get there, it will blow through that and get to 21,000 right away."
Obviously, we got there. Pretty much as I said we would.
Now, here's my secret to being right. It's a not-so-secret kind of secret you can use that works every time.
I don't have a crystal ball. I figure out which way the market is going because it shows me.
It will show you, too. It shows anyone who's watching it the direction it's going.
Why It Was Easy to Call 21,000
Going into the election, of course, everyone was super cautious. In fact, most big investors were on the sidelines – if they weren't betting on a Hillary Clinton victory and the market bumping higher on that possibility.
So, there was a lot of money waiting to go to work.
And then BAM, Donald Trump wins.
When the futures tanked on his announced victory, then rallied like the dickens hours later when he made his victory speech, it was "off to the races" for stocks, at least the whole market based on indexes.
All you had to do was watch the market make a U-turn and rally with all the sidelined money waking up.
It doesn't have to make sense. The market often doesn't make sense. It's the market. It does what it does. Don't get hung up on figuring out what you think it's going to do. Watch it; it will point you in the direction it's going.
Follow along, and you'll end up with bigger profits.
There's a human-analytical side, too: group psychology.
About the Author
Shah Gilani is the Event Trading Specialist for Money Map Press. He provides specific trading recommendations in Capital Wave Forecast, where he predicts gigantic "waves" of money forming and shows you how to play them for the biggest gains. In Short-Side Fortunes, Shah shows the "little guy" how to make massive size gains – sometimes in a single day – by flipping large asset classes like stocks, bonds, commodities, ETFs and more. He also writes our most talked-about publication, Wall Street Insights & Indictments, where he reveals how Wall Street's high-stakes game is really played.