When Traders Belong on the Sidelines

	Alan Farley The Street.com
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Novices who see stocks entering a transition phase should be cautious and protect their capital.

First-year traders are especially vulnerable when markets start to sell off. Early forays into courses, chat rooms and stock boards usually cultivate a distorted view about market movement. In this mindset, rising prices are normal and falling prices are abnormal.

In reality, markets frequently rise and fall in big waves. New traders need to adapt quickly when markets shift gears; otherwise they won't survive. The need for speed comes because the biggest drawdowns take place in early transitional periods like the one we're in right now.

There's often a rush to the short side when markets turn downward. But this is usually the wrong thing for new traders to do. In the early stages of knowledge...

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