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Trend Trading For Dummies by Barry Burns

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Chapter 19

Using Relative Strength to Make More Money

In This Chapter

arrow Looking at what trends are hot and which are not

arrow Watching strength signals to determine your move

arrow Being the first to the party (of the trend)

I explain in Chapter 18 that buying into a market that’s overly popular will normally get you in late to the party and often just before the market turns around. However, it doesn’t mean that you should ignore such markets. They can still present significant opportunities, just in the opposite way most people would guess.

In this chapter, I show you how to spot trading opportunities, using the concept of relative strength, which is the measurement of the strength of one market relative to the strength of another market. (Note: The term relative strength, as I use the term in this chapter, has no correlation to the Relative Strength Index [RSI] often included in the list of indicators of charting software platforms.)

Knowing how to use relative strength may enable you to find potentially great trading opportunities early and at a good (low) price.

Finding What’s Hot Now

The use of relative strength can help you choose which market is likely to offer the best opportunity ...

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