Trade the ‘now’ and not try to force the trade to do what we expect, is a worthy consideration.
We come across this from time to time in most areas of our lives. In trading it happens daily, sometimes several times a day.
We have a preconceived idea of how something will play out, which is fine, it’s called planning. But when this blinkers us to the flexibility of reacting with the ‘now’ the planning can be detrimental.
Day trading, more than any other form of trading or investing, brings this out more clearly because of the short time frame involved. By that I mean that the lesson is learnt and understood because it all happens in one day and we can analyze it correctly for what it is.
In other forms of trading or investing the time frame can be much longer, several days, weeks or years. And this gives us time to reanalyze, rethink, and convince our brains that how it played out was actually our original (failed) plan all along.
Trading should be analysed and planned, as I showed in my last blog with regard to the possible future price movement of the S&P. But in following the plan, the ‘market’ will buck and fake and keep us guessing. If we let greed take over and we try to force our plan onto the market to squeeze every penny from the trade then more often than not we will not win.
If we don’t read the ‘now’ signals we will waste a lot of cash trying to force the market to do our bidding.
To combat this, it is correct to analyze and plan but not at the expense of the ‘now’. By the now I mean the price movement that is happening at this moment.
Let the action play out, let the market show its cards before we commit.