Traders don’t trade markets. They trade their beliefs about the market.
Have you experienced this?
We make up our mind that x event is a good and y event is bad and then become blind to market reality. Just remember how majority of the market participants became fundamentally bearish including me on Brexit and Trump Victory but price action remained contrary to the opinion
There are times when a tradeable asset makes a fast move, contrarian to your belief. Since, it’s contrarian to your belief, you are not positioned to take advantage of it. Worse, sometimes you have a reverse trade in place. There is total disbelief. Such trades can inflict a huge amount of financial and emotional pain. The stock keeps making the move and you remain in denial that this cannot be true.
The most important lesson:
As traders we have opinions, as good traders we don't stick to those opinions.
— Robert Dunn I do not DM or Solicit a Discord Group (@TraderGoalieOne) May 12, 2016
Disbelief Trade:
There are times when market does something contrary to your belief system. The stock does everything in text book style and all out in open that can be seen through naked eyes but we are so biased that our brain rejects even what we see. Our response: This cannot be true.
Always Remember – Market does not care what you think. If you are following price action – then just trust your eyes.
The EXPERT NOISE
What is your view on the market?
Nobody knows what market is going to do in the future
https://twitter.com/vixcontango/status/762045944498126849
Do you remember the above August call? Just see what market has done since then especially US market. Never pay attention to opinion makers. What you need to follow: Price Action. The market makes top and bottom only once but market analysts forecast top and bottom every single day.
Trust Price Action > Personal Belief
The market is a forward-looking mechanism and expectations are generally priced into markets. The market generally reprices the surprise and hence it’s important for a trader/investor to be vigilant to new sources of surprise. What market does is far more important than what it should be doing. Keep your eyes open and trust the market action and not your brain because that can be very painful at times.
Always Remember
If the markets were certain then there would be no markets. No one can give you a 100% guarantee of what market will do; all we know is what it can do
AND
The market moves wherever it wants to go. It does not care about you or me. It does not play favorites. It does not discriminate. It does not intentionally harm any one individual
Markets keep changing all the time. Your strategy has to be flexible enough to change when the environment changes