The old knowledge you have of the company should not affect you

You might have read of a company like Astra Zeneca in the papers lately. You might there have learned that they are having problems with the marketing of some products on the international market, and that some of their products are not considered competitive since other vendors products are almost as good and a lot cheaper. Some of their old patents might be described as soon outdated and more competitors will soon enter their market. You once again look at the chart, it is in a downward trend. You look at news on the net about the company and find very little.

• So you have a downward trend, bad press, and no positive news. What do you do?

Ignoring signals due to old knowledge, means that the system will not work for you

Let us say you decide not to buy, and then miss the fast upgoing stock move. A couple of days later you read an analysis of the company stating that their portfolio of researched products is considered stronger than what has been believed earlier and that they are recommended as a buy.

Most likely, your system caught those tiny signals indicating that this was a company for which there started to appear buyers. Probably due to some positive information not known to the whole market yet. So what did you do wrong?

You let your old knowledge of the bad state for the company interfere with your belief in your trading system. Your bottom fishing system is designed to find turning points in downward moves. The reason for the downward move is likely to be lack of positive press, or even availability of negative press. You are not likely to have inside information of upcoming positive news when your system triggers. If you hold your buys in this situation you are second-guessing your system, and letting old knowledge cloud the fact that the system signaling the buy is designed to find turning points in downward moves.