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TheStreet Open House

Keeping It Simple: Why Short Traders Are Losing Money This Week

 

NEW YORK (TheGoldAndOilGuy.com) -- One thing I have talked about several times is the tendency for investors to believe that complex trading ideas and automated trading systems are better than simple, logical ones.

At first thought this notion is completely understandable. After all, if an idea is fairly simple, how could it possibly be "a secret" and investors not using it yet?

Successful trading and investing is not about how good you look or how impressive you sound in videos. It's about what, when and how you do it. It does not matter if you are placing the trades yourself or using an automated trading system. What, when and how the investment is traded is all that matters.

Read More: Warren Buffett's Top 10 Dividend Stocks

It's known that highly intelligent people struggle with the markets because they believe intelligence will improve their trading results. The reality is, they do not think simple trade setups and strategies that look like they will make easy money will work. Why? Because they think that the market is complex and thus trades should not be simple to spot and time, therefore the simple ideas should not work.

In all fairness "simple trading" is not really that simple. Successful trading requires the right kind of simplicity, in the right amount at just the right time. This is what creates the highly profitable investors and automated trading systems.

Why are short traders losing money this week? Because they are fighting a bull market which is still pointing to higher prices.

Take a look at the chart below of the S&P 500 futures index. You will notice the bars are color coded. This is done by my automated trading system that identifies the market trend which trades should be trading in line with.

The stock market remains in a full-blown bull market. Investors should remain long for time being. On the other hand, active investors should be trading with the current market trend shown on the chart.

Read More: 7 Stocks Jim Cramer Sees Ripe for Takeover

Market corrections within a bull market are sharp and short lived. As an active investor you will be lucky to catch one or two short trades during these pullbacks before the uptrend is retaken.

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