If you are a trader, you will relate to these Trading Wisdoms....
Reality of the Market
Majority of the traders fail because they do not understand the reality of the market Most of us are not even playing the right game Materials available over the net and the books written by failed traders teach technical analysis patterns and indicator based signals and we assume this is the reality
The indicator based TA signals and price patterns are illusion.These are only effect. Cause is something else Then what is the cause? Price Indicators and patterns are derivatives of price Then price is the cause and TA patterns the effect So we need to focus on price
Do not reach a conclusion so fast Price is another effect and there is something that makes prices move in markets. What it is? It is the order flow. Orders make the market move. If the net order flow is on the buy side market will go up. If net order flow is on the sell side market will drift down
Then order flow is the real thing that moves the market. Oh No .Dig a little deeper. Yes. It is the people who act in the market by feeding their orders When people start bidding higher, price will move up when they start lowering their offers price will start moving down
When people are going to bid or offer aggressively? It is when they feel the urgency and desperation to transact This is when they become emotional So it all comes down to the emotion of the market participants Fear and greed are the most powerful emotions that can force people to act If you are able to identify the price levels where a large enough group of traders succumb to these emotions and able to act there without hesitation, you will win in this game Trading is nothing but engaging the other party Encashing their fear and greed
Suppose you are in a shopping mall People will be moving around in a random manner Then you hear an announcement that the first ten purchasers of a particular item will get another free You can see so many people rushing to that counter That is greed in action Then you go and press the fire alarm button. Everybody except you will rush to the exit. Fear in action
Now you know it Fear is much more powerful emotion than greed
When an archer is shooting for nothing . . . he has all his skill;
If he shoots for a brass buckle . . ............. he is already nervous;
If he shoots for a prize of gold . . ............. he goes blind,
or sees two targets . . ............................ he is out of his mind!
His skill has not changed. But the prize . . . divides him.He cares. He thinks more of winning than of shooting and the need to win drains him of power. – Chuang Tzu, 400 B.C..