I come across lot of articles and traders "predicting" the market. I too have not been spared by this question and get asked numerous times each day. My response is usually the same “I am a trader, I don’t have thoughts on the what the future holds for the market.”
Most people have the notion that if they can predict where an asset class will be in the next couple of trading sessions, they can make a load of cash. Of course even if reasonably certain about where the market will be there is always some room for doubt, we just never know for sure where it will go.
Yet we try to convince ourselves that we are going the right direction. We basically “hype” ourselves up to take the trade by telling ourselves “Oh, yeah, it will work out. I am going to make a killing. This is going to be awesome.” We base a trade off our prediction and our hyped up viewpoint.
Even if the market does go up, our prediction is too general to be of use. The market is not like flipping a coin like most people think. It doesn’t only go straight up or straight down immediately after a trade is taken. It can go up a little then drop a lot, then rally a lot, and then drop a little, and then do almost nothing for days on end. We may expect it to move a lot and it doesn’t, or move a little and it moves a lot. Look at the market each day and determine how it is moving to establish some expectations.
If there is very little movement, then believe what the market is telling you. Don’t try to predict when it will breakout or start moving again. The price will tell you when that happens. Trade what the market gives you.
Avoid baseless predictions. Every trade should be a based on a strategy that has been tested and that you have traded in a demo account showing it to be profitable for you.
Assuming a strategy will work for you because the strategy worked for someone else is also a baseless prediction. We are all slightly different and a strategy I use may not work for you, or a strategy you use may not work for me. Test it out. Don’t leave anything to chance.
You don’t need to know which way the market is going to go to make money. That is why traders seek out strategies — to eliminate the need for prediction. The strategy gives a mathematical edge and tells them exactly how to enter and exit trades.
Trading is Not About Prediction. Start practicing and implementing the strategy, and stop predicting.
Most people have the notion that if they can predict where an asset class will be in the next couple of trading sessions, they can make a load of cash. Of course even if reasonably certain about where the market will be there is always some room for doubt, we just never know for sure where it will go.
Yet we try to convince ourselves that we are going the right direction. We basically “hype” ourselves up to take the trade by telling ourselves “Oh, yeah, it will work out. I am going to make a killing. This is going to be awesome.” We base a trade off our prediction and our hyped up viewpoint.
Even if the market does go up, our prediction is too general to be of use. The market is not like flipping a coin like most people think. It doesn’t only go straight up or straight down immediately after a trade is taken. It can go up a little then drop a lot, then rally a lot, and then drop a little, and then do almost nothing for days on end. We may expect it to move a lot and it doesn’t, or move a little and it moves a lot. Look at the market each day and determine how it is moving to establish some expectations.
If there is very little movement, then believe what the market is telling you. Don’t try to predict when it will breakout or start moving again. The price will tell you when that happens. Trade what the market gives you.
Avoid baseless predictions. Every trade should be a based on a strategy that has been tested and that you have traded in a demo account showing it to be profitable for you.
Assuming a strategy will work for you because the strategy worked for someone else is also a baseless prediction. We are all slightly different and a strategy I use may not work for you, or a strategy you use may not work for me. Test it out. Don’t leave anything to chance.
You don’t need to know which way the market is going to go to make money. That is why traders seek out strategies — to eliminate the need for prediction. The strategy gives a mathematical edge and tells them exactly how to enter and exit trades.
Trading is Not About Prediction. Start practicing and implementing the strategy, and stop predicting.