A Traders daily plan 4
setup:
as mentioned in the prior segment of those series we need to have an edge to engage into the market for it to make sense that over the course of a sample size we actually beat the markets.
No such thing as a sure thing.Why?In principle no one can tell where an individual trade is heading .After all it only takes one person on the other side of the trade to change its outcome-given the fact that he trades a sizeable portion of that trade.
But fear not we can stack the odds just like a casino does since over the course of time certain human traits are present in the market which can be exploited.
For illustration we all grew up with denomination values of our currency,which in American standards would 1,2,5,10,20,50,100 $ bills.Since these values are conditioned into our brains there are abnormalities in trading behavior around these numbers which can be exploited. you all know the example of the .99cent store phenomenon which worked until now by customers assuming since it is less than 1$ it might be cheap to shop there(far from the truth).
imagine stacking a number of such human behavior traits and we have a system possibly worth while to throw at the market.
the following few posts will deal with technical analysis tools that try to do just that if proper aligned and used in context.
Let me state so right away trading is not as easy as a Lego system where with a few tools toys and gadgets one can extract constantly profits from the markets since execution and psychology is the large part of this game and takes like any other mastery many years to shape into form but one gotta start someplace and someplace is here...
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