It is important to be able to see the first signs of a fading trend. There is no better exercise than to watch hundreds of strong moves on history – the moves that always, inevitably fade, lose strength and reverse. Nothing lasts forever, and in order to stay in balance, Market must go through constant change, allowing some instruments to appreciate while others must depreciate. Inevitably, they will trade places, as one trend changes into another.
Take any market you trade and see a trend fade. Do not just look at one instrument, ask where the money is going if it is flowing from this market? If stock market becomes bearish, the money must go somewhere, whether it is bonds, metals, oil or just cash.