There is a substantial risk of loss associated with trading Derivatives . Losses can and will occur. My methods will not ensure profits

Saturday, May 25, 2013

If and Then

My trading revolves around Decision Points and Price Flips. These levels create a framework or structure within which the price moves. There is nothing special about these Decision Points. These levels are good old support and resistance levels where majority of the traders act.

What is there in a name?  In fact the name matters a lot psychologically. I have written about it in an earlier article (Read). If we call a particular level “Support”, our mind automatically perceive the level as a buying zone. Here we start looking at the market in absolutes and will find reasons and patterns to go long, where none exists in reality. Further if something happens contrary to our expectations we are taken off guard and we freeze.

Trading is a mental game where we have to be flexible and dynamic all the time.. We must be able to quickly change our views as the Market changes. If we hold a fixed view it is not possible to process new information objectively. Our mind will block or misinterpret the information in support of our belief.

Trading is all about developing scenarios. Instead of seeking certainty, think “If and Then” possibilities. Hold opposing ideas in mind and be ready to change your bias as and when the price action unfolds at the hard right edge of the chart.

Now, do “Decision Points” make sense to you?

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