Martin schwartz5/2/2023 At its core, the T theory states that the markets spend the same amount of time going up and down. Here we don’t want to explicitly talk about the indicator itself (just google Terry Laundry T Theory), but about the underlying price principles that the indicator is built upon. Therefore, if you continuously try to call tops and bottoms, but you often find yourself on the wrong side of the trade, it may be a good time to re-think your approach. At first glance, it becomes obvious that periods in which price continues to make new highs or lows can last long and occur frequently the white areas where no new high or low is made occur less frequently. The graph below shows the price of the S&P500 (black line) and the green and red bars mark new 3 months highs and lows. Amateur traders always try to call tops and bottoms and enter trades counter to the ongoing trend, although riding the existing trend would often yield much better results. This principle means that once price starts trending, there is a good chance that the trend will continue. #1 An object in motion will stay in motion In the following article I would like to discuss and revisit 11 of his personal trading rules and principles, which I also use to some degree in my own trading, that could help other traders improve their own trading and provide some insights how a professional trader approaches trading. Marty Schwartz has always been my favorite trader from the Market Wizards book and I recently read his own book (Pit Bull: Lessons from Wall Street’s Champion Trader).
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