Trend Qualification and Trading

A key to trading is determining what personality the market is exhibiting at any given time. Is it trending; is it range bound; are breakouts getting follow through? Once the “type of market” is identified, trading actually isn’t that hard. If the market trends up, you’ll buy dips or breakouts. If the market is range bound, you’ll buy dips and sell rallies and be content to grab a few bucks in the middle.

Trend Qualification and Trading by L.A. Little talks about qualifying trends – that is, he offers criteria to determine (to the best of anyone’s ability) whether a trend is strong or weak and whether it’s likely to continue not.
Trends are easy to identify after the fact but not so easy in the heat of the moment and therefore not so easy to use to make money. And identifying a trend isn’t sufficient. We’ve all bought a stock at 12, sold and 15 with a nice 25% profit, and then six months later were kicking ourselves when when noticed the stock at 45. Identifying good trading opportunities and entering isn’t enough. We need framework, a set of criteria that can be used that helps us stay in trades. This is what L.A. Little attempts to do in Trend Qualification and Trading.
At times the book’s principles are a little too structured for me (I believe some discretion is needed), but there’s definitely a few nuggets here that will improve your trading.