trade what you think, not what you see PART 1

trading is anticipating the next move or series of moves--very much like chess or even tennis, one needs to anticipate where the opponent is going to hit the ball, or the next move on the chess board. trading what you see is living in the past and doomed to mediocre success ( if you have talent) and outright failure if you do not. as has been pointed out in several popular market books and by countless cognitive psychologists--- the eye is very deceiving to the brain, no where is this more apparent than in real time chart reading. it is obvious that charts deceive so we trade what we think, not what we see.

i am tired of the same old thing being said over and over again when it comes to charts and trading. same thing, different angle over and over--so i am going to present something a little different in this series....

the marketsurfer daytrading methodology involves knowing that what we see is not what we get and applying the art of intuitive anticipatory chart reading to circumvent the inherent problems in trading what you see. i will elaborate further soon...

best,

surfer

 

sounds tubular, dude.

 

Let's agree to disagree on this, Brother marketsurfer... at least for me, trading is about reaction to familiar scenarios (trading what you see), and is not about prediction (trading what you think)...

Depending on what precisely you mean by your opener (which may be contingent on your trading methodology, the details of which I am not aware of), we need not necessarily be diametrically opposed on this issue... it could just be our different way with words, boiling down to fundamentally the same thing... its actually possible to argue it both ways i.e. in trading what you see, you are inherently, and a priori, trading what you think, given that trading what you see must be based on some methodological rationale... so it is of course possible that what differentiates your and my opinions is mere semantics...

 

brother candle,

the reality is what you see has already happened. one needs to anticipate what is going to happen thereby trading what you think.

surfer

 

As candletrader says, need to agree on definitions first since this slogan might mean different things for different traders... As known promoter of Trade what you see, not what you think, I would like to offer my definition.

To me, trading what you think means holding onto one's opinion despite what market action tells him. Trading what you see means admitting the market reality. Let me illustrate: he who trades what he thinks will be holding the stock of the company that announced cancer cure sold in China over Internet wirelessly with Linux based server, Pokemon logo embedded on the box (those who lived through manias of 1999 smile here, others shrug). He is going to hold because China is huge market, and cancer cure is so hot and... and... Stock will go lower, breaking support after support, and he will be still holding - because he THINKS it's going to work eventually, sellers are wrong, manipulators shake out weak hands, etc etc. He who trades what he sees is going to take his stop because what he sees is: stock is weak, support is broken, his stop is hit, the rest is just words - market reality tells him a trade is not working, end of story.

This is the meaning I put in this slogan.

 

"See" in this sense is identifying recognizable patterns and trading on a probabilistic system that you've developed over "x" number of years where by what you see should give a profitable outcome..and stop loss takes care of the rest.

"Think" in this sense takes care of those traders who have no understanding of company reports, economic data, etc. and derive a trade based on opinion of how they feel 1. The report will read (which is basically just a guess) and 2. How they feel the crowd responds to that news. This is stricly opinion which the market could care less about.

Best example is Fed report....will they cut by 1/2 point 1/4 point..etc. How many of us have ever been on the Fed board? How do we know what they will do...more importantly..how do we know how the crowd will react? Basing a trade on that "I think the Fed does this and the market does that" is where I will never trade "what I think".

I can trade from structure of "stock makes x range, normally stock does this, I go with what it normally does and stop out when stock doesn't do this". Creation of IF/Then scenarios.

This is my sense of "trade what you see, not what you think".

My 2 cents.

Chris

 

Marketsurfer,

When you say the “need to anticipate”, aren’t you referring to the notion of thinking “what if” the market does this or “what if” the market does that from this point forward and be prepared to react accordingly; basically anticipating the what-if scenarios and pairing it with the appropriate action, whichever happens to materialize? But you must first “see” what has already transpired in the market before you can make a reasonable anticipation on which to conduct a trade. Am I reading it correctly?

Kermit

 

whoa, i had no clue that this thread would create such heated response. allow me to explain my views a little deeper.....

i think i understand what threei and chris mean when they say "trade what you see not what you think" it is a definition issue--- in their view--trading what you think, refers to trading your bias, and trading what you see refers to being bias free. if i am wrong, please correct me.

every trade is an anticipatory action, one is placing a bet, so to speak, on the next or next series of actions . what you see has already occurred, it is history--my trading deals in the future thereby trading what i think, not the past--what i see. it is impossible to be bias free when entering a trade, if you have no bias (trading what you think) you would not be able to choose a direction to enter the market ( long or short ). of course i am not referring to any exotic option or freaky quant spread positions that are market neutral. the key is to remove the bias once the trade is on, not to try to crush your market bias when deciding to enter and what direction. once you enter the trade, one needs to be bias free, to quickly cut the loss if wrong and to freely accept all the positive movement in your direction the market will give you--- riding the wave like our index system tries to do.

the bias that one needs to freely accept before entering the market is the first step to developing the intuitive anticipatory chart reading ability that is critical for success. trading what you THINK, anticipating intuitively the next move.... more soon stay tuned..... part 1 continued

 

yes. one needs to enter the trade with bias, then ride the trade without bias. one needs to see the past, but trade the future by anticipating intuitively the next move. what you see has already occured, thereby making it impossible to trade. one needs to trade what you can't see yet but what you think--since you can't see the future. hope this makes sense.

best,

surfer

 

are these part 2 & part 3 of PART 1