Trade what you see not what you think!

 

“Trade what you see, not what you think” is a popular trading mantra that emphasizes the importance of making decisions based on actual market price action and trends rather than subjective opinions or predictions about where the market should move. It encourages traders to rely on objective data and signals provided by the market rather than being influenced by emotions, biases, or personal beliefs.

Key points related to this trading philosophy:

1. Price Action: Traders who follow this mantra focus on analyzing the actual price movements of the financial instrument they are trading. They pay attention to chart patterns, support and resistance levels, trendlines, and other technical indicators to identify potential entry and exit points.
2. Avoiding Biases: Traders may have biases or preconceived notions about the direction of the market based on news, rumors, or personal beliefs. The “trade what you see” approach encourages them to set aside these biases and base their decisions on objective data.
3. Staying Objective: Emotions, such as fear and greed, can cloud judgment and lead to impulsive trading decisions. By focusing on what the market is actually showing through price action, traders can make more rational and objective choices.
4. Adapting to Market Conditions: Markets are dynamic and constantly changing. Traders who “trade what they see” are more adaptable to shifting market conditions and are willing to adjust their strategies accordingly.
5. Risk Management: Following the market’s actual price movements allows traders to implement proper risk management techniques. They can set appropriate stop-loss levels and position sizes based on the reality of the market, which helps protect their capital from significant losses.
6. Confirmation: Traders often look for multiple confirmations from different technical indicators or price patterns before making a trade. This approach adds an extra layer of validation to the analysis and reduces the likelihood of making trades based on a single unreliable signal.
7. Discipline and Patience: To trade what you see requires discipline and patience. Traders may need to wait for clear and reliable signals before entering or exiting a trade, even if it means missing out on some opportunities.

In summary, the “trade what you see, not what you think” mantra promotes a disciplined and objective approach to trading. By focusing on actual market data and price action, traders can make more informed and well-calculated decisions, leading to a more consistent and successful trading experience.

 

Trade the market not emotions.

“Trade the market, not emotions” is another essential trading principle that highlights the significance of maintaining emotional control and objectivity when making trading decisions. Emotions, such as fear, greed, and impatience, can significantly influence a trader’s behavior and lead to irrational choices that may negatively impact their trading performance. The mantra encourages traders to base their decisions on a careful analysis of market data and follow their trading plan rather than letting emotions dictate their actions.

Key aspects related to this trading philosophy:

1. Emotional Discipline: Trading can be emotionally challenging, especially during periods of market volatility or when facing losses. Traders who adhere to “trade the market, not emotions” focus on controlling their emotions and avoiding impulsive actions driven by fear or excitement.
2. Sticking to the Trading Plan: A well-defined trading plan outlines a trader’s strategies, risk tolerance, and money management rules. Traders who prioritize the market over emotions stick to their trading plan consistently, regardless of short-term market fluctuations or emotional impulses.
3. Risk Management: Emotions can lead traders to take excessive risks or skip proper risk management techniques. By focusing on the market, traders implement effective risk management strategies, such as setting stop-loss levels and proper position sizing, to protect their capital.
4. Avoiding Chasing Losses: Emotional traders may try to recover losses quickly by making impulsive, high-risk trades. Traders who follow the mantra stay disciplined and avoid chasing losses, as it can lead to even more significant losses.
5. Objective Analysis: Emotions can cloud judgment and lead to biased analysis. Traders who trade the market objectively rely on technical and fundamental analysis, as well as other objective indicators, to make informed decisions.
6. Patience: Emotional traders may feel the need to constantly be in the market, leading to overtrading. Traders who prioritize the market remain patient and wait for high-probability trading opportunities that align with their trading plan.
7. Stress Reduction: Emotionally-driven trading can cause stress and anxiety. Trading the market with a clear and objective mindset can reduce the emotional toll and foster a more focused and composed approach to trading.

In conclusion, “trade the market, not emotions” emphasizes the importance of maintaining emotional discipline, sticking to a well-defined trading plan, and making objective decisions based on market data and analysis. By minimizing the impact of emotions on trading, traders increase their chances of making rational, well-calculated choices and improving their overall trading performance.

 

NOOT-No Overnight Position

See more