Behavior of #smallcaps is significantly different between strong and weak cycles. One has to track the cycles accurately because expectations can shift so much that any mistake made in strong cycle can get multiplied many times if risk is not respected which is common.
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1.
For example there are no strong AH runners in most of times except in strong cycles where big % AH runs are common. You only have to make one mistake of being sloppy on swing shorts without being aware of how cycles impact you and it can be enough to give back plenty gains.
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2.
There are no type4 patterns or fake breakouts reclaims to high degree in most cycles except in strong cycles. Which means that one has to be extra careful shorting breakdowns or rejects above HOD there.
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Basic rule is mistakes get multiplied many folds in strong cycles even if those only represent just 20% of total time in smallcaps. It's because of that why figuring out specific behaviors that happen only in strong cycles is so key. There is plenty that happens only then.
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Common mistake is for beginners to swing short and getting caught by surprise with major AH runner and surprise hit next day. Once strong cycle is on the needed rule is to avoid early swing shorts. But some gets lured to table by high meat on the bone ticker falling for it.
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5.
The difficulty of smallcaps comes from large diversity of moves and ranges that are highly cyclical. 4 out 5 times X and 1 out of 5 times it's 5X. That 5X surprises many, yet it's cyclical pattern if you observe it well enough.
#trading
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#trading
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