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TRADING #101 COURSE – PART II TWO: SUCCESSFUL TRADING PIE – WWW.TRADERSCOACH.COM
Top-Down Approach Is a Fundamental
Technique Used to Scan for Opportunities
Top-down analysis looks at the big picture from the sector standpoint, then moves down
and looks at the industry group, and then finally looks at the individual company. Moving
from left to right in Table 10.2, you can see how this plays out. For example, if you
looked at the following from this table you would see:
• Sector: Information Technology.
• Subcode: 4530.
• Industry Group: Semiconductors.
• Company: Intel.
The Top-Down strategy works like this:
1. Look at many sectors to find one that, for example, that is not performing well.
2. Find an industry group within that sector that is also not performing well.
3. Then find one individual company within that industry group that is performing
well despite the sector’s downturn.
4. When the sector turns around, that one company is likely to break out from the
crowd quickly and do very well.
Refer to Chapter 2: Selecting Your Financial Market in this course to see more detail
on a Top- Down strategy and a Down-Up strategy.
NOTE: Sector analysis can be used for commodities as well.
Opportunity Is Abundant in the Markets
The most important principle of opportunity is to be sure that you are viewing the
financial markets in the most beneficial way.
You’ll need to be sure that you are approaching whatever market you trade as one that
is abundant in opportunity. This is an important mind-set that will open you up to the
idea that you are not operating from a position of weakness but instead from a position
of strength and abundance.
As you will see, there is an infinite number of possibilities available to you regarding
what type of financial market to trade and what worldwide exchange to trade through.
Look at the tables throughout this chapter to see the vast array of markets you can
choose from.
Each market has its own personality and requirements, and you will need to align
yourself with the right market for you now at this point in time in your development. As
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