IMF to the rescue....Read here
Nobody can really tell you the real reason why a stock/index is going up or down for a specific reason. And if that reason seems plausible, it is difficult to prove it as well. Why then do traders (humans) need to know the answers ?
Call it the human curiosity or fear of the unknown. Be it going uptrend or downtrend, they need a reason to back it up. Like the recent Fed interest rate , that has been attributed to the stock market performance. So , each time the Fed lower interest rate and the stock market respond in kind, then the belief becomes stronger over time.
The scary part is trawling through the internet , researching and studying and analysing the reasons and fail to pull the trigger. Like yesterday's 1000 point DJI up move. Many traders were still speculating if it is a dead cat bounce or a V-shape recovery and choose to wait for confirmation.
And the result was a missed opportunity. As traders, we must have the courage to pull the trigger and have equal guts to face the consequences if proven wrong. We have stop loss to protect us. If we constantly shun from pulling trigger and keep on waiting till the coast is clear, we might missed many boats.
And then, we regretted and start to chase high price and suffered a pullback, and was stopped out. Then , we concluded the market was rigged, we were not good, swear never to come back to trade again ( I lost count of that), etc.
This independent act of pulling the trigger is crucial as a trader. If you are constantly relying on someone's trade calls, believing there must be something amiss, need more confirmation , then you can trade in micro lots where the chance of failure is reduced to the maximum. That means, if you are wrong, your financial loss is bearable. Do this enough times, you would improve your confidence and get better and better.
I have followers who shared with me that they used to follow a certain author but some of their calls were not good so they switch. If that is the reason, I bet any authors would have his fair share of wrong calls. That is not how winning is made in the market.
Most made by the probability of wins over the losses. Out of 10 trades, they might win 4 trades and lose 6 trades. It might appear they are not good since they lose more trades than win. But more importantly, when they win , they win double the rewards over the risk. That means the risks is small and contained while the profits/win are double or tripled. So 4 wins result can be a positive out of the total 10 trades.
Accuracy of trade calls can be sharpened over time but the concept of win/loss ratio is key as this builds the winning formula. Thus, jumping from one author to author may not be the solution , in fact , it can mislead or confuse you as they may use different indicators or way of looking at the chart. It is like reaching the end goal but the journey to reach it can be varied. No right or wrong. Some are well versed in moving averages while others like Bollinger Bands and others swear by RSI or MACD.
Discover for yourself over time what trading styles suits you and build your success from there! Rome is not build in a day so have patience and clock in the 10,000 hours and you will and can surpass your cyber-mentors!
