The job of a trader is to recognize opportunity...not follow the market. That's the herd mentality, and the majority are always wrong. I agree that the information the market gives us is neutral. We decide on our reaction to it. I read Douglas' book and it really helped me release feelings of right/wrong in the market. Money management is alot more important. I don't really care if I loose as long as my risk is managed.
another suggestion do not trade during the time of day when you have "no clue" ( this can vary from market to market )
I agree, I remember buying GE on a gap down hoping it would bounce. I bought it all the way down til like noon. I was getting upset that it wouldnt have any real bounce, but when I checked my net I was up! I had paid a boat load of fees, but I was making money buying a tanking stock by trading into my position. In the end I got out on the first decent reversal. I can't remember if it retraced its gap or not. I dont think id ever attempt it on an overnight position tho, lol 8s
Another brief thought for struggling traders.....if someone put a trend, or a chop zone, or some chart of data in front of you and told you to examine it what would you do? I suspect you'd probably go about your business in an objective way and come out with some sort of conclusion, based on the data that is presented to you. So why is it traders tend to lose their objectivity when they enter the stock market. The stock market is nothing more than data. It's just a historical road map that represents a collision of a multitude of data samples. Approach the stock market from an objective viewpoint. Put your finger over the AAPL, or RIMM, or QCOM, or ES ticker for a moment, and just look at the data. What is it telling you? I get a good laugh when the gurus get on TV and pump XYZ. All they are doing is pumping a data set. Your response may be, "But dude, AAPL has the iPhone, iPod, kicks MSFT's butt, etc...." I hear you, but these are nothing more than explanatory variables. I'm not saying there's no place for fundamental analysis, and competition doesn't matter, but when it comes down to it the only thing that really matters is if you can examine the data in an <i>objective way.</i> Before you've had a chance to think about that forget about what you think or what you want. Just let the chart talk to you. Free yourself from the burden of having to be right!