Long Term Secrets To Short-Term Trading

1. 
Don't try to buy big dips below the open on expected up close days. 
 2. 
If long and prices fall much below the open on expected big up close days, "get out." 
 3. 
Don't try to sell big rallies above the opening on expected large down days. 
 4. 
If short and prices rally much above opening on expected large down days, "get out." 
Don't try to argue with these statistics, they are the laws of gravity controlling how stock and 
commodity prices move. The tabulations shown here can be replicated in any freely traded market, thus 
representing a universal truth of how, on average, trading transpires during any given day. Yes, you will 
occasionally see large-range days that work both sides of the opening, but that is the exception, not the norm. 
The averages are against bucking this law. As a trader, I want as much going for me as I can. My winning 
trades don't come from luck, they come from having the tables tilted in my favor. 
Where the Trend Is with You-The Second Power Play Price Pattern 
Is the market in an up- or downtrend? Will prices most likely go up or down from here? Indeed, is there 
anything that might help us understand what is in store for future price activity? These are big questions, the 
answers the uninformed and those unwilling to think and study, have failed to find since trading began. 
just as we have learned that, generally speaking, small ranges set up large ranges, there is another 
fundamental design to the way prices of stocks and commodities move across the march of time in any 
country, any time frame. 
Thus we begin your first lesson in understanding trend analysis in the marketplace. The basic principle 
is that as prices move from a low to a high there is a shift from where the close is in each day's range. 
Remember, it makes no difference whether we are using 5-minute, hourly, or weekly charts. The same rule 
applies. 

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As a market low is made the close of the day, or time period, is right at or very close to the low of that day's 
range. Then seemingly out of nowhere, a rally begins, and as this rally unfolds, there is a marked 
relationship change. The change is that the further along this uptrend matures, the higher the close will be on 
the daily bars. Figure 2.16 presents a stylized view of this relationship change. 
Markets bottom with price closing on the low of the daily range, while they top out when closes are at 
or near the high of the daily range. 
The uninformed think "smart money" comes into the market with buying thus reversing the trend. 
Nothing could be further from the truth. As MY long-time friend Tom DeMark says, "Markets don't 
bottom because of an influx of buyers, they bottom because there are no more sellers." 
We can look at this relationship of buyers to sellers at work on virtually every day or bar that takes 
place. My operating rule, which I first wrote about in 1965, is that sellers in any time period are represented 
by the price swing from the high of the day to the close, while buying is represented by the close