Saturday, November 22, 2014

The Market Doesn’t Give A Shit About You

by Chart Shark

The market doesn’t care if you’re a bear or a bull. It doesn’t care if you think it’s oversold or undervalued. It doesn’t care about your fundamental analysis or your charting skills. The market will do what the market will do, with or without you. You are not in control.

Accept It

One of the worst things you can do is a trader is to start to feel like you’ve lost control of the market.  You should never feel that way because you never had control in the first place.  You can have all the indicators in the world telling you to buy only to enter the trade and have it immediately go against you.  Accept it, you are not in control.

Ego

Sometimes you let your ego get the best of you.  It happens to the best of us.  You make a few great trades and you feel like you’re running the market.  Inevitably though, the market will give you a brutal lesson in humility.  It is up to you whether or not you get your ego back in check and persevere.  Always remember, you are not in control.

What Can You Control?

The only thing you can control is yourself. You can not control the market, but more importantly, the market can not control you. Only you control when you enter and exit the market.

Entry

You control your entry. The market can not pull you into a trade. As much as it seems like a stock is screaming at you to make a trade, it can not pull the trigger for you. You enter when your predetermined entry criteria have been met, not when the market tells you to. Now, you are in control.

Exit

You know the saying “plan the trade and trade the plan,” and that includes a planned exit on a failed trade.  You have spent countless hours honing your trading skills.  You know the set-ups you are looking for and you enter trades based on these set-ups.  If that set-up fails, you have to punch the eject button.  You take the loss and you move on.  Losing is a part of trading; accept it.  Once again, you are in control.

The market doesn’t give a shit about you.  It will exist whether or not you do.  On the other hand, as a trader, without the market you are nothing.  You are essentially a parasite and the market is your gracious host.  A host organism will learn to fight off and destroy harmful parasites, but it will allow useful ones to coexist.  Learn to accept what you can and can’t control and harmonize with your host and you will have a long and happy life of day trading.

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{ 18 comments… read them below or add one }

StockRake

Great points, they can’t be said enough. You could do this post everyday for psychological purposes.
.-= StockRake´s last blog ..Short $NDX At Close =-.

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Chart Shark

Thanks StockRake,

I agree with you. It can help to think about stuff like this before the market opens every day. I like to visualize set-ups and potential trades, and remind myself of what I can and can not control.

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Michelle B

Does my automatically clicking to post a comment means I have no control?

Anyways, agree with StockRake, this post can be posted daily, and it will never lose its appeal. Maybe have a clickable link to this post under the heading of each new post. Make the link hard to miss and something appealing, like an image of something attractive (I am thinking food/nature here, but I do realize that there are other kinds of attractive images available).

I think that putting your blog on my newsreader would make your day even more, so consider it done.

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Chart Shark

“Does my automatically clicking to post a comment means I have no control?”
I think it means I’M in control. Uh oh.

“Make the link hard to miss and something appealing, like an image of something attractive (I am thinking food/nature here, but I do realize that there are other kinds of attractive images available).”
I’m thinking boobs. Everyone clicks boobs. It’s one of the fundamental rules of the internet. Without it, the web would crumble.

“I think that putting your blog on my newsreader would make your day even more, so consider it done.”
Make my day? More like my weekend. Thanks!

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Fede R

agree with you.
moreover, never feel obliged to trade at all costs just because your friends or workmates or other people you HAVE to compete with do so. think of strategies that make you feel comfortable — if you look at the screen for updates every minute, maybe something is going wrong..
cheers from Italy

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Chart Shark

Absolutely. If you don’t see the set-ups you’re familiar with, simply don’t trade. Great advice.

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mutant_dog

Congrats. You were linked by Abnormal Returns, which is one of my stretch goals for any blogging I may decide to do.

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Chart Shark

Thanks man, I’m pretty pumped about it.

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Nick Danger

These are the words of a man (person?) who knows what he’s talking about. Nicely written post, I enjoyed it. Whenever I have followed this advice, I have come out ahead (more often than not). And when I’ve hung in there out of stubbornness, I have lost big time. Thanks and keep up the good writing.

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Chart Shark

You are correct on both man and person, Nick. Glad you enjoyed the post. Your comment reminds me of a great financial quote about stubbornness.

“The market can remain irrational longer than you can remain solvent.” John Maynard Keyne

Don’t let those losers put you out of business. Thanks for commenting.

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bob

its all about stops. they protect you from your ego.

thanks for sharing your insights

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Chart Shark

Definitely, Bob. Stops are a very useful part of any strategy.

Thanks for commenting.

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Mark

This is great, finally someone who knows what they’re talking about. “Harmonize with your host” — well said.
.-= Mark´s last blog ..BreakoutStocks: New breakouts for $PALM today, good stats http://tinyurl.com/n6kmrt =-.

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Chart Shark

Thanks, Mark.
I wouldn’t make the mistake of thinking I know what I’m talking about. It could be detrimental to your portfolio. :)

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tradersam

Very succinct. I enjoyed your clarity. Profitable trading seems to stem from the game that is between what you can control and what you cannot in the markets.

As an aside – I note you haven’t followed up on your response to Michelle B’s comment.

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Chart Shark

Thanks for the reminder. I’ll have to find a suitable photo so I can test this clickability theory. Look for it in the sidebar soon.

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Code

Sounds like words from a mo-mo trader. Not words from a passive value investor. Every move depends on your strategy. Discipline is the key.

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Chart Shark

You’re right, discipline is key.

Every move of your account depends on your strategy & discipline. Every move of the market does not. They are discrete entities. Doesn’t matter what type of trader, or investor you are.

You are also right that I am a momentum trader, and not an investor. I give my money to people who are smarter than me for investing purposes.

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