It's-all-too-common
It's a universal experience. You feel personally attacked or demoralised when it happens, correct?
The good news is there's a solution, which I'll share in a minute. But first, knowing the issue is key to understanding the solution.
Lost on traders is:
Trading is not waiting for a pattern or setup to appear to enter the market—that's amateur hour.
Instead:
Imagine you're a detective solving a crime. You start by gathering evidence and—like a puzzle—putting the pieces together to form a plausible thesis.
The same applies to trading. But instead of solving a crime, you're solving:
- Who's going to move the price?
- Why will they move the price?
- Where will they move the price to?
What do you notice about the questions above? They're focused on the actions of human beings, and for good reason.
If not familiar, the Medallion fund is famed for the best record in investing history.
It's a fund that trades using computer-programmed models. Founder Jim Simons revealed:
"We don't want to predict price, but we want to predict when other market participants are going to do something."
Cycles, sectors, technology, and market activities are always changing, which is why trading strategies have short shelf lives.
The only approach built to last is rooted in human behaviour because human beings don't change.
But what about playbook trades?
Let me explain:
You did or still travel the same route to and from work.
But ignoring the time they take, there are alternative routes you can choose.
Price takes different routes from one price level to another regularly. Each signature trade is a map of a one of the routes price can take.
If and when the market starts agreeing with your thesis, choose the signature trade matching the current route.
Now you have accurate directions to trade your thesis. Make sense?
A note on human behaviour:
You can pay experts on human behaviour who'll tell you everything there is to know about:
- Unconscious bias,
- What happens at a brain-chemical level and,
- How it impacts decision-making.
But ask them to show you all the different ways it's expressed in the markets, and it's... crickets.
Yet the footage below is your front-row seat to a trading approach rooted in human behaviour.
Human beings don't change, so these principles have always been effective and will continue to be so in the future.
Now's the perfect time to cement your understanding of how effective trading is when based on human behaviour with the 3 minute demonstration below.
Forex and derivatives trading is a highly competitive and often extremely fast-paced environment. It only rewards individuals who attain the required level of skill and expertise to compete. Past performance is not indicative of future results. There is a substantial risk of loss to unskilled and inexperienced players. The high degree of leverage can work against you as well as for you. Before deciding to trade any such leveraged products you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading on margin, and seek advice from an independent
Editors’ Picks
EUR/USD clings to small gains near 1.1750
Following a short-lasting correction in the early European session, EUR/USD regains its traction and clings to moderate gains at around 1.1750 on Monday. Nevertheless, the pair's volatility remains low, with investors awaiting this weeks key US data releases and the ECB policy announcements.
GBP/USD edges higher toward 1.3400 as traders await key data and BoE
GBP/USD reverses its direction and advances toward 1.3400 following a drop to the 1.3350 area earlier in the day. The US Dollar struggles to gather recovery momentum as markets await Tuesday's Nonfarm Payrolls data, while the Pound Sterling holds steady ahead of the BoE policy announcements later in the week.
Japanese Yen adds to strong gains and drags USD/JPY to 155.00 amid hawkish BoJ bets
The Japanese Yen extends its steady intraday ascent through the Asian session on Monday, dragging the USD/JPY pair to the 155.00 psychological mark in the last hour. Against the backdrop of the recent shift in rhetoric from Bank of Japan Governor Kazuo Ueda, an improvement in business confidence reaffirms market bets for an imminent rate hike this week.
Editors’ Picks
EUR/USD clings to small gains near 1.1750
Following a short-lasting correction in the early European session, EUR/USD regains its traction and clings to moderate gains at around 1.1750 on Monday. Nevertheless, the pair's volatility remains low, with investors awaiting this weeks key US data releases and the ECB policy announcements.
GBP/USD edges higher toward 1.3400 as traders await key data and BoE
GBP/USD reverses its direction and advances toward 1.3400 following a drop to the 1.3350 area earlier in the day. The US Dollar struggles to gather recovery momentum as markets await Tuesday's Nonfarm Payrolls data, while the Pound Sterling holds steady ahead of the BoE policy announcements later in the week.
Gold builds on previous week's gains, approaches $4,350
Gold preserves its bullish momentum after rising more than 2% last week and climbs toward $4,350 on Monday. The precious metal extends its upside as the US Dollar remains on the back foot on growing expectations for a dovish Fed policy outlook next year.
Solana consolidates as spot ETF inflows near $1 billion signal institutional dip-buying
Solana price hovers above $131 at the time of writing on Monday, nearing the upper boundary of a falling wedge pattern, awaiting a decisive breakout. On the institutional side, demand for spot Solana Exchange-Traded Funds remained firm, pushing total assets under management to nearly $1 billion since launch.
Big week ends with big doubts
The S&P 500 continued to push higher yesterday as the US 2-year yield wavered around the 3.50% mark following a Federal Reserve (Fed) rate cut earlier this week that was ultimately perceived as not that hawkish after all. The cut is especially boosting the non-tech pockets of the market.
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