Never make the mistake of thinking that you will ever really know what will happen next in the market. Nobody walking the face of the earth knows exactly what is going to happen tomorrow and the sooner I accepted that very fact, my personal trading results took a big turn for the better. This statement of fact may be a bitter pill to swallow for some because we all want to believe that there is a way to predict market outcomes time and time again. However, prediction can be a dangerous game. Human nature dictates that we always want to be right and traders can get pulled easily into the trap of looking for trades to make money, as opposed to trading for genuine objective reasons. It is easy to stick with a trading strategy when it works but hard to stay with it when it doesn’t, often leading to the temptation of deviating from the plan when we want a winner to come in so badly!
Throughout the ongoing Extended Learning Track (XLT) program, I take a different approach teaching students how to be objective and unemotional in their trading, much of which I have discussed in previous articles. I like to deter them from thinking that they have to be right all the time. If one continually attempts to predict market directions and outcomes, they will soon lose sight of what consistent market Timing is really all about: High Probability, Low Risk and High Potential reward speculation, not being right each and every time. In the real world of trading, even “High Probability” does not equate to “Guaranteed Success” and I encourage all of my students to learn to take a loss and enjoy them – they are simply part of the business after all.
However, this is not to say that I don’t encourage students to formulate a forward-thinking approach to their market analysis as I firmly believe it is important to be aware of all of the possibilities of price and direction. It’s almost like preparing yourself for things that could happen, even if they don’t happen. It is never fun to be… Continue Reading
