DON’T ASSUME THERE IS A RATIONAL REASON BEHIND THE MARKET DIRECTION
Market direction is simply the way the market is moving at any given time during the day, and can change at any moment. Market direction is based on the number of trades that take place at certain prices, no more no less. That is why when you think you have the direction called, the markets change and move in a new direction.
When a trader remains focused on what is happening, they remain focused on their own trades without wasting energy trying to understand why. The market will move where the market will move, one thing is for sure, the market does not need to have a rational reason why it is moving in a direction. Overcoming the need to rationalize a reason behind a market direction will serve to support a stronger trading plan.
SHOW UP EVERY DAY AND MAKE YOUR TRADING ASSUMPTION BASED ON WHAT YOU ARE SEEING
I like to begin each trading day by reviewing the markets to form my trading assumptions. A morning routine helps me to stay grounded in trading based on what I am seeing that day. Create your own morning routine that helps you to stay focused on the trading behaviour of the day. Don’t place a trade based on what happened the day before, focus your attention on what is happening in that moment.
IT DOESN’T HAVE TO MAKE SENSE, IT STILL HAPPENS
Many traders fall in to the trap of deciding their market outlook because of a logical argument or forecast. Their pre-conceived bias can blur what is actually happening in the markets, and lead to a trade based on this bias rather than what is happening in front of them. In order to avoid getting stuck in a trade because it was placed based on “it has to reverse today it’s been rallying for way too long” will probably lead to losing trades. Maintaining an unbiased opinion about the markets as you trade them is critical. Don’t cloud your judgement with pre-conceived notions.
Believing in yourself and your ability to analyse the markets in the moment will not only help you to build your confidence, it will also support a stronger trading plan. Let go of any desire to try and rationalise market behaviour, and instead focus your energy on your own analysis and trading routines. This shift in focus will help any trader avoid the mistake of trading with a market bias.