教育

The markets are there to make you feel stupid or brilliant

已更新

Many a trader will have made their best analysis based on information at the time and then taken an entry position, only to find that the market does something unexpected. Price may move violently in the wrong direction i.e. not the favoured direction and comes close to a stop loss or actually stopping out the position for a loss. Now with hindsight a trader feels or thinks, "How stupid - I should have seen it coming. I shouldn't have done that."

This happens enough times to new traders. Seasoned traders live with it and have less such self-talk. I think it's important to acknowledge those feelings. These are partly thinking processes and emotional processes. New traders often feel demoralised after 10 or so failures in a row. "Am I doing something wrong?" - they may think. This is a reasonable question. It could be that something is wrong. However, nothing may be found wrong with one's methodology or application of one's personal rules - after a careful reassessment. It's good to check.

The BTCUSD chart shows what is some sort of 'head and shoulders' pattern. It's not the best picture of it in the world but something is there. Wherever one takes a position in BTCUSD, it could be wrong. Why? The markets respect no one person.

A proportion of traders will have taken a position in this and made some real profits. They will punch the air and with joy go, "YESSSS!!" From my long experience I've learned that 'feelings' of being right or wrong, actually bends the mind a trader. I'm speaking for myself quite clearly. Others may have similar experience. A feeling of being good after a string of wins, often creates a subconscious sense of confidence. Imperceptibly this can creep into future trades and then one realises some major losses.

My own strategy is to try at best to reduce trading frequency and exert even greater diligence in entering trades after a series of wins. I aim to expect the unexpected. It's always a tad difficult when I get stopped out for a loss. But I repeat to myself that the stoploss is there to protect against the 'unexpected' - so it's not actually unexpected. It is a limit. It is the expected limit of price moving not in a favoured direction.

There is no single path to 'a promised land' in trading. Traders can adopt different methods, different rules, and be consistently profitable. The largest obstacle which is difficult to train out a trader, is their own personal psychology. By this I mean things like attention to detail, biases, emotions, discipline etc. So in many ways feeling stupid or brilliant can affect our future decision-making in imperceptible ways. Traders can lose discipline after losses or big gains. Mark Douglas spoke about these sorts of things.

The BTCUSD chart is not intended to attract thoughts on whether to go long or go short. I'm not really interested in whether the H&S is there at all or correctly drawn. I'm taking it beyond that. What happens next to traders who come out of this period - some bruised, some overjoyed? Trading is not about winning one trade or a small handful. It's about the long road ahead.

I'm delighted if others can share their experiences.

註釋

The recent rebellion shows that it has only reached the 50% Fib of the A leg (Elliot Wave) - at this time. If this hovers around here for too long this is not the making of a sound rebellion.

註釋

And the bulls are gunning for the higher shoulder. Bears to keep their powder dry. There could be a mauling of the bulls. ;) :) Price could reach the Fib 61.8, or it may not. The urge is to short this now, which is to expose one's account to greater risk. There is fear of missing a plunge. The balance is between fear of missing the mark and fear of blowing an account.

註釋

On the daily chart, a right shoulder could be developing. Look to lower time frames as well.

註釋

The market has found a different shoulder on the right (at this time). The market is the 'master'. This could get ugly for the bulls. (This is not a prediction. I do not predict).