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You plan your trade to take advantage of what you believe is NOT priced in yet.

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Market Trading Environment
Don't overlook it.

The stock market's environment cannot be overlooked.

      Don't try to make yourself an economist. It's not necessary, but the more you know, the more you know.
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     Before a stock market or option trading coach sends you in to play, he/she needs to verify that you understand the big picture of the game. The function of the stock market is to act as a discounting mechanism providing valuation and a trading platform for corporate stocks, bonds and derivatives (options & futures).  You can view the market as a proxy as to the health of the economy looking forward about three to six months.

     Think about that for a moment, the market discounts news as well as expected earnings looking forward in time.  As such, the driving force of valuations and re-evaluations is news- week-by-week, day by day, minute by minute.  It is the same news that instills fear and greed in investors.  News, good or bad, is quickly evaluated adding or subtracting from current stock price valuations, i.e., does the event add potential profit or detract from profit?. In addition to company specific news there are core economic elements that affect the market such as a rise or fall in interest rates, fuel prices, inflation, taxes, government regulation and economic indicator announcements, corporate earnings, competition, currency valuations, to name some of the more important ones. Therefore, you need to be aware of these events.

     The action in the stock price will tell you what the markets think of the news. You need to trade the reaction rather than the news itself..."buy the rumor, sell the news" is an old
Wall St. expression.  All of these swirling push-pull phenomena become your trading environment.  So do you buy (go long) or sell (short) a stock? Do you start with the chart or with the market environment, i.e., do you start from the bottom up or from the top down?  If you've followed this so far, you'll have no problems.  If you're still baffled, call me...this is what I do, I teach you the critical stuff. 

"The "fair value" quoted on TV refers to the relationship between the futures contract on a market index and the actual cash value of the index. If the futures are above fair value then traders are betting the market index will go higher, the opposite is true if futures are below fair value." source: investopedia  

Fair value is only relevant in the real world as to how the market will open and not how it will behave all day.  

A sample News Headline provided by briefing.com.

Below is your market environment.   Do you know where we are now in the cycle?

out of recessioninto recession

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