“We attempt to make order out of the market and find reasons for everything. This attempt to find order tends to block one’s ability to go with the flow of the markets, because we see what we expect to see rather than what is really happening.”
-Dr. Van K Tharp
The day a trader gives up their personal opinions and begins to ask themselves “What is the chart saying?” is the day they break through to a new level. Our job as traders is not to predict it is to figure out what the chart is saying through price action. Charts can show currently if capital is flowing in or out of the market you are trading. Clues are given at resistance levels, support levels, moving averages, some trend lines, and volume. A chart is a fact while our opinion is just that, and everyone has one. The markets are hard to trade for the majority because they are counter intuitive. Bull markets end when sentiment is the most bullish and the market runs out of buyers at higher prices, bear markets bottom when everyone has already sold out and no one wants to sell at the low price. Monster stocks implode when they are over owned by institutions and their fundamentals are close to a peak. Trends continue in the same direction until some force acts upon it to stop it or reverse it. My biggest money is always made when I shut out my opinions and follow the chart. My losses are when I fight a trend and start believing “It just can’t go lower” or “It just can’t go higher” trust me, YES IT CAN! Trade the chart, not your opinions, that is what the vast majority of all the top rich traders do.
“If the chart disagrees with your opinion then follow the chart.” -Steve Burns