I have a fundamental belief: there's a REASON or explanation for EVERYTHING and EVERY PHENOMENON.
When a person acts in a certain manner, there's an underlying reason and motive that drives him/her to carry out that specific act.
Even those with a psychiatric condition have reasons for doing everything that they do: they are obeying the instructions of an inner voice.
Serial killers kill for thrill; the Joker, Batman's greatest nemesis, commits hideous crimes for many reasons, one of which is to have lots of fun; politicians have agendas; the office jerk wants to get to the top of the corporate ladder faster than anyone else; and so on and so forth.
When a market moves in a certain way, there are reasons, causes and factors behind its moves. When it surprises us, it's because there are developments that we are not aware of, which we might or might never find out in time to come.
It takes a lot of experience and diligence to get a good grasp of the factors that move a normal market and those that move the crazy one.
Even crazy markets can offer a lot of insights if you are patient enough to just sit and watch closely what they do at each and every trading session, then find out as much as you can about the events that are unfolding during, before and after that period.
Given that my thoughts are always in a jumble, I constantly look for ways to organize them and the way I do it is to SIMPLIFY.
I ditch everything that I can't fathom.
My experience with deciphering codes and complex concepts brings me to the conclusion that anything that seems complicated at first glance can eventually be simplified for ready digestion if it's something that actually makes sense.
The way that a concept, an idea or an information is
presented may make it look complicated, and we might have to do some deciphering to get to the essence of the topic in question, if it indeed has any value to begin with.
On the other hand, when something is hopelessly convoluted, it makes me question its validity, authenticity and sensibility, and I will throw it out in a heartbeat.
With the market, and I'm referring specifically to intraday movements, it's not difficult to figure out why it's moving or not moving in your favor. For most of us, the answers will present themselves if we have done our homework before we enter the market.
But what truly matters is not whether you find out the reasons and answers immediately or if you'll ever find out at all. What matters is that you
ACCEPT that there's a reason, and to stay in the game, you'll have to either go with the flow, or stand by the side until you're confident enough to hop on, without dwelling on the should haves, would haves and could haves.
The worst you can do to yourself is to simply dismiss the market as something that's totally irrational and erratic, and since there's no way to figure it out, you'll just TAKE A BET and PRAY for the best.
There are occasions where an apparently bullish market retraces in the absence of negative news, or any news for that matter. When that happens, and I have volumes to look at, and when D asks what's happening, I'll tell him it's profit taking. When trading a vehicle like ER2, I'm ok with taking the ride along with the profit takers. I'll stop when volume spikes all of a sudden, coz that tells me that too many people are along for the ride, and many are clueless that "bearish" is NOT THE trend.
By the same token, in what's supposedly a bearish market, prices can move up to unexpectedly high levels in low to moderate volume. When that happens, I wait for a surge in volume, when you know the smart money have almost sold all they want to be rid of to the clueless folks. This sounds really cruel, but that's the reality of the trading arena - you then wait for the latter to realize that no one else are buying and they start disposing of what they have in a state of panic.
All said, as far as trading is concerned, I know for a fact I'll never know all the reasons that move the market on a certain day or over a certain period. What I don't want to be is clueless.
There's a saying that a little knowledge can kill.
I can't agree with that more.
But simplicity saves the day - and having too many answers and wanting to know all the reasons can easily cloud a trader's judgment and divert his attention from his goals.
At the end of the day, if what you have at your disposal is giving you a 70% - 90%
probability of getting 'it', why would you want to expend your energy on chasing after the mysterious factors steering the market away from the direction you've predicted?
And who's the bad influence who convinced me to accept that
probability is the order of the day?
D.
Cool D.
Yes, I'm a broken record.
:-D
