A MILLIONAIRE TEACHING HIS KID
WHEN NOT TO BUY STOCKS
Dow Theory (the rule nobody explains clearly)
Kid:
Price is going up. Everyone says “buy the dip”.
Why do my dip buys keep failing?
Dad:
Dow Theory answers only one question:
Is the trend still alive — or already dying?
Trends don’t end when price falls.
They end when structure fails.
The ONLY 3 Dow Theory Rules:
https://t.co/AVYG4MnwK9 long as Higher High + Higher Low holds
→ trend is UP
2.First Lower High = trend is WEAK, not reversed
3.Trend changes ONLY after Lower Low
Chart notes:
• Buy dips ONLY here
• Stop buying here (lower high)
• Trend officially broken here
• Structure breaking
• Lower Low
Why beginners lose using Dow Theory
• They buy after the last higher high
• They confuse pullback with trend
• They refuse to accept the first lower high
Kid:
So what do you actually do?
• Buy pullbacks ONLY until HH–HL holds
• Stop buying after first LH
• Exit after LL — no debate
RISK
Invalidation = last Higher Low
If structure breaks,
I’m wrong.
Most traders lose money one structure before the trend actually ends.
Warren Buffett: “You can earn very high returns with very small amounts of money. It will always be [that way].
I don’t mean that everybody can do it, but if you know something about values and investments, you will find opportunities.”
Warren Buffett’s explanation of intrinsic value is timeless. In this clip, he breaks investing down to its purest form: cash in, cash out.
He says it’s not about hype, charts, or analyst calls, it’s about understanding how much cash a business will make, when you’ll get it, and how certain that outcome is.
His “bird in the hand” analogy nails it. Every investment comes down to trading what you have now for what you think you’ll earn later. The better you judge that trade, the better investor you become.
21EMA on daily
Weekly breakouts
Bull flags
Thats all I use 90% of the time for Swing trading.
Buy when stock breaks above 21EMA and a bullish pattern
Sell when stock breaks below 21EMA.
It is not complicated.
Think of every decision as a bet with a probability and a reward for being right and a probability and a penalty for being wrong. Normally a winning decision is one with a positive expected value, meaning that the reward times its probability of occurring is greater than the penalty times its probability of occurring, with the best decision being the one with the highest expected value. #principleoftheday