WY-01-07 / 02
Step Two: Select Instruments Aligned with Market Direction and Suitable Relative Performance
First Principles
Lesson / WY-01-07
In the classic stock context, step two compares candidates within the same market environment. A general market reaction subjects many stocks to a common external stress. A stock that declines less, recovers earlier, and holds its support is relatively strong under that stress; one unable to cross its own resistance during a market rally is relatively weak. A shared time window cannot eliminate every difference, but better answers “who produces better price results in similar conditions?” than isolated return comparisons.
Course content is for learning and research only. It is not investment advice.
Read the Chapter ↗Timestamps
7 lessons · Chapter contents
01Step One: Establish the Overall Market’s Position and Probable Direction↗02Step Two: Select Instruments Aligned with Market Direction and Suitable Relative Performance↗03Step Three: Assess Whether the Established Cause Supports the Expected Target↗04Step Four: Assess Whether the Instrument Is Ready to Move↗05Step Five: Time Participation with the Overall Market↗06Dependencies and Reassessment between Steps↗07Redefinition and Adaptation beyond Stock Selection↗Observe the market: start with context and place price within its structure.
Understand structure: compare supply and demand, and let evidence support or revise your hypothesis.
Form a view: define risk limits and know when to reassess.
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