We are human. We have a brain that unfortunately thinks and makes us believe that we are smarter than others. We see things but we reject it on the ground that it does not make sense. We then act contrary to what's there. All this is fine if it's being done for intellectual reasons. But, this can be a very dangerous thing when it comes to trading.
Let me share a scenario: One fine day, you are angry for whatever reason. You read a newspaper article that validates your opinion. Yes you tell yourself everything is bad from politics to economy. You are angry at Modi Govt for whatever reason and then you see Nifty making life time highs. You say to yourself - How is this possible? This makes no sense. Let me Go and Short the market in Futures. The position goes into Loss. The market keeps moving higher. You get more angry and bitter. You keep telling yourself - the end is near. Well my friend, I am not sure about the end of the market but yes your end is near. This is how people commit suicide in market. We become a prisoner of our beliefs.
Let me share another story: Donald Trump won Nov election.
The market surprised everyone by rallying on the belief of huge tax cuts. But slowly politics got ugly. Every large investor started screaming caution and even Sell. One of the best ways to play Fear in the US market: Buy VXX (Volatility ETF/ETN). You think you are smart. You disregard the trend. You self-congratulate yourself that you are early and about to make huge money. Well this is what has happened to that trade -
Forget huge money, you are already sitting on a big loss.
When it comes to trading - there is no point fighting the market or an established trend. It only makes you bitter and poor. If you have to survive in the market for long long long time - always be in harmony with the market. Be at peace and don't look for sanity and logic. It's a place where you have to surrender to survive. It's a very tough lesson and everyone has to go through the pain to learn this simple fundamental lesson, which I am offering free right now 🙂
Do Share your experience and thoughts. Chalte Chalte -Here are few random traders discussing this philosophy
Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers