Home > Apprentice Trader Journals > NEVER PREDICT, REACT!

NEVER PREDICT, REACT!

Today’s meeting and insight on the trading day yesterday brought a lot of ideas full circle for me. Pete mentioned that a lot of traders including myself were confused with the market yesterday especially during the morning sell-off after the gap up. As Pete began explaining that essentially, the market is going to do what it wants and you cannot have any emotions about it, I began to remember the famous Mr. Market metaphor by, of all people, Warren Buffett.

Interesting how this fundamental investor provided one the best insights on Prop. Trading and specifically trend trading. Simply put, if you did your home work, you have a game plan, a price level, an ISL, an IPT, a break even point etc…, you are very well prepared but the market is not looking rational to you, step back and do nothing.

Mr. Market does not always give you the right price says Warren, he also does not always give you the right set-up. It’s OK.

Don’t get upset, mad, frustrated, simply look for the opportunities Mr. Market is giving you, or wait. It is very easy to feel like you need to do something, and I know this has been said over and over, but we need to keep reminding ourselves that doing nothing is also a position. Sometimes, by sitting back, and calmly cycling through your stock you may start to see things differently than what your perfect picture of the market looked like coming into the day.

You may start to see swing-low opportunities in a strong market week opening situation. You may start to see relatively strong stocks in a non-broad based market. You may even realize that, hmm… I rather not take these trades because the risk/reward is not there.

Patience is a virtue and it pays to be patient!

-Lee

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