Reacting versus Predicting in Trading

By | June 1, 2015 3:47 pm

Most of the best/Professional traders I have read about and know of personally do not predict what will happen they trade what is happening.

New/Amateur traders always want to predict, they want to argue about their beliefs and why something must happen or will happen.

Most Professional traders are rich because they are flexible, they have no strong opinions and are just looking at possibilities and ready to take a set up, buy a break out or short a break down.

A Amateur  trader believes that ‘conviction’ about a trade is important, holding through an adverse move is usually a bad idea, especially if a key level is reached that is showing the trader that they are wrong.

A Professional trader is waiting for some price level to trigger their entry then another price level to trigger their exit.

A Amateur trader is trading off a belief and has no real exit plan most the time because they are sure that they are right.
The money I have pulled out of the market over the past 10 years has come from trading price action not predicting. I have entered at high probability moments on break outs above resistance levels. I have trailed my winning trend trades with a stop and sold when the trend reversed through key short term support.

When I was wrong I stopped out for a small loss, when I was right I let the winner run up for a very big win. I am always trend hunting, always taking my high probability trades, always cutting losses short, and when not seeing a great trade doing nothing and waiting.

8 thoughts on “Reacting versus Predicting in Trading

  1. Hiren

    In Gujarati, there is a saying that when you lose, you learn.

    Now, when you decide to share your learning is a matter of personal preference, but the sharing is worthwhile. Afterall, we try to be wise and the wise learn from others experience.

    Hiren.

    Reply
  2. Rakesh

    Most of the traders making money are in Trading Education so that’s surely a good way of making money.
    Predicting for others, analysing for others and giving gyaan to others and getting paid for it is a good way of making money when one’s own money is not at risk.
    I encourage the author to share any actual trades he does on a regular basis. buy above/sell below is very easy to write.
    I am sure not many people including the author makes any money in actual trading, that too in buy above/sell below type of technique.

    But yes making money by educating others and encouraging others is a sureshot way of making money, other ways are running a brokearge, analysing for others, giving endless gyaan,selling trading software, selling tips.

    These are good money making businesses for sure. Good luck Bramesh.

    Reply
    1. Bramesh Post author

      Dear Rakesh,

      Thanks for your view. I believe you fall in 90% crowd who never makes money and out of frustration comments on things which you can never attain.

      If you cannot make money it does not mean other cannot.

      Try to master your weakens slowly things will fall in place.

      I do not give TIPS, i just share my analysis. If you feel Buy/Sell above figures are easy to write than try to do that for 1 month in a professional manner.

      Rgds,
      Bramesh

      Reply
  3. KLSabharwal

    THE ABOVE GUIDE LINES FOR NEW/PROFESSIONAL TRADERS ,ARE LIKE GOLDEN RULES FOR ME BEING BEGINER. I AM OBELIDGED.THANKS

    Reply
  4. Damodar

    Your experiences go a long way in teaching, A few examples from your day to day trades would go a long way in our learning.

    Reply

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