A little over a week ago, I wrote about how it is worth taking note of anything that is making an “all time high” (or low). “All time” in trading is usually taken to mean five years.
It was and remains a topical subject, because both the U.S. Dollar Index and the major U.S. equity index, the S&P 500 Index, were making all-time highs. In the case of the U.S. Dollar Index, it was only very close to making an all-time high.
I explained why all-time highs and lows are technically significant and are a time when trading with the trend can really put the odds in your favor.
Since I wrote that piece, on 16th November, the S&P 500 Index has gone on to make new all-time highs, and has risen by 1.71%. The U.S. Dollar Index has, over the same period, risen by 0.71%. Unlike the S&P 500 Index, it did not make a new all-time high on Friday.
It is worth noticing that stocks tend to move by larger amounts than currencies, meaning that if you can trade stocks or stock indices during a strong trend without paying huge spreads or overnight financing charges, it is usually more profitable than trading Forex.
As the S&P 500 Index is still making all-time highs, by the same logic, it is still worth trading. One of the pitfalls of trading trends, is that you can think to yourself it is too late to enter, a retracement is overdue, etc. You might be right, but the logic remains in favor of taking the trade.
