It is amazing that common sense is really not that common. Be that as
it may, you need to use your common sense when trading.
One summer I was working in our office in Johannesburg, South Africa.
Behind our office is a beautiful park with a small stream and waterhole for
children to play in. One day I arrived at work during a massive rainstorm.
That gentle little stream behind the office had turned into roaring rapids, and
the waterhole was now engulfed. I thought to myself, “wow, the water was
crystal clear yesterday and today it looks extremely dangerous.”
If that waterhole was your favorite place to swim, and you had made
plans to go there after school with your friends but had found the muddy
water and rapids when you arrived, would you still jump in? I would hope
your common sense would tell you to stay out! The breaking of a trend line
offers a tremendous amount of temptation to get in the market and go with
the new trend. As a novice trader, don’t use one single reason to get in—
find as many reasons as you can.