It is my firm belief that the reason traders lose, is because they dont know how to follow. Instead they want to lead. There's a famous statement.."be first to be second". That holds true for the markets. Markets move on supply and demand. Fear and greed. NOT indicators. The goal of trading is to ride the movement of price. It's not to PREDICT where it's going. That's not the goal of what traders do...however that's what the perception is. The perception everyone always gets accustomed to is.....where the market SHOULD be and how to profit from it. In addition, this is what leads to most of the emotional issues as well. But does that make sense? If I feel something is worth $30 and to another person it's worth $50.....am I going to get it? No. All I do is bid up the price (hey now that's an interesting thought ). It's the same thing with trading. Why assume price should be somewhere.....when there's already someone bigger and better out there who wants it at a far different price. Now turn that one person into millions. See where I am going with this? So here's what traders SHOULD be doing. They should be analyzing areas where those buyers and sellers do and dont want the product. Where's the demand? Where's the supply? Where isn't there going to be supply or where isn't there going to be demand? These factors all move price and velocity of price. Now this isn't going to help the average trader, because the average trader hasn't put the thought into how to profit from this. Instead money is usually the motivating factor. I'll expand on this a little further later, but it's something to consider next time you put that trade in. On a side not this is purely technical. Fundamental is a whole different topic.
I think we all know that supply and demand drive price. The problem is how does one quantify supply and demand? That's why technical analysis exists. Fundamental analysis is too nebulus a concept for me personally.
But technical analysis is predicted after a days trade, I think it is hard to predict where the market is going base on previous day trades. I read and listen , watch and then decide to buy or sell. So far I am doing OK.
Any trader, successful or unsuccessful, is trying to predict where the price is going. If you're going to "ride the movement of price", you're predicting that the movement is going to continue in the direction of your position. If you're not making any prediction, then you're simply gambling.
Its about probablity more than prediction. If something seems probable (and that could be based on several ideas including some fundamentals) than you place your bet. If the bet turns against you, thats where cut your losses comes in. How far down a person lets the price go before exiting is based on the amount of capitol a person has started with and their own personal system and how much of a loss that system can tolerate to sustain itself and stay in the game. In other words...NOT GO BROKE