Trapped in a Mindset
Posted on November 23rd, 2009
Written by Richard
Posted in: N/A (old archives)
One of the biggest mistakes you can make as a trader is to ignore the information the market is giving you. The number one reason why I find myself doing that:
Because I already think I know what is going to happen.
It’s not wrong to form opinions. In fact, I think it’s great practice to guess what the market is about to do. If anything else, it gives you something to do while waiting for trading setups. But, when you start to like your guess better than reality, that’s when the market proceeds to punish you mercilessly.
Today, I woke up just after the big morning push up. I thought to myself, “ok, uptrend. I’ll get in on a pullback.” Nothing wrong with that assessment. Price dropped a little. I tried to get long but wasn’t filled. Price dropped a little more. I got long and lost. Price dropped a little more, I got long and lost.
When price is dropping again and again, that’s not a pullback; that’s a drowntrend! And worse than missing it, I was playing against it. Luckily I got my head back on straight in time to put on some winning trades. I outlined the rest of my day in the team collaboration area.
Remember: If you have the correct view of the market context, you will find your setups working well for you. If you are putting on loser after loser, then double-check your overall assumptions, because they are probably wrong.
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© 2010 Richard Todd. I am not a financial advisor, and nothing on the site should be considered investment advice or actionable recommendations. I'm just an individual, saying what I think, and sharing my experiences.