If we are being honest, there is a lot of guessing when it comes to trading. As technical traders, our goal is to put the odds on our side. We know that if we do, we have a better chance of being successful. That said, there is still some luck involved pertaining to how the market moves and how the underlying position is affected. But sometimes traders can’t control themselves and are biased.

Do you force your opinion on a stock or the market believing it should do something based on your thoughts, and are you surprised when it does not act as anticipated? If you have traded at all, you will have had an opinion about a certain stock or the market and most likely both. But what I see far too often is the disappointment when a stock does not perform as the individual predicted. Well, guess what? Stocks and the market sometimes have minds of their own, no matter what you may think.

No Real Control

Like all those who trade options, we have free will (within reason and monetary constraints) to buy or sell whatever we choose. The market and stocks have free will too. You cannot force your opinion on something because the market sets the price no matter what you may think. That is why there are buyers and sellers to make the market.

Now don’t get me wrong, we have all thought a stock, ETF or index is too high or low aside from any technical analysis we may do. The market has been very volatile, and I have had several students shaking their heads in disbelief. How can the market not be surging lower when there is so much uncertainty in this world? I have heard that more than a few times over the past several months. That is fine, but when you are not willing to separate reality from your opinion, you get yourself into trouble…trust me!

Go With the Flow

As I like to say, play what is in front of you and try to put your beliefs aside when analyzing stocks and the market. Try to separate your own personal thoughts and opinions from the market, especially for short-term trades like swing trades, and focus on the technical aspects instead. Instead of asking why, ask yourself what has a better chance of happening based on technical analysis. I promise you will be better off from a financial perspective, and there will be much less head scratching going on.

John Kmiecik, Market Taker Mentoring