That Uncomfortable Feeling

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Bull & Bear Fighting

When price turns from bearish to bullish, the difficulty is always knowing where is the buy point.

Traders will often look to indicators for help figure out what price is doing. There is some guidance the indicators can provide but inevitably the decision to enter should be based more on price than what any indicator has to offer.

Every pullback many traders miss the buy points due to feeling uncomfortable with the current market situation. And every year I get messages that will typically be a deer in headlights story and price has moved up without them due to fear of entry.

Pullbacks and bear markets
If you consider that 2009-2019 had been the longest bull market in history. So the worst that had occurred was a pullback (less than 20% decline). And if you now think of all those bullish trends over a 10 year period that were missed for fear of losing money, it begs the question, how?

Put that in a little more context. If you missed out on bullish trades at this moment in time (March -May 2020), it is more understandable as this is the first bear market we have experienced since 2009 and it was certainly a severe swoop down that caught most traders out.

To miss out on trades when the market is bullish means the fear of losing money is too much of a focus.

So how do you overcome this fear in the future?
I learnt that disassociating myself from the monetary aspect of a trade helped.

I assumed each trade would fail and that removed the emotion while the trade was in play.

I also stopped looking at my trading account balance but instead looked at charts and percentages. That took away the financial connection.

Ignore the news
When news is released, the market already knows about it and has already reacted accordingly. The reaction may follow-through for days or weeks but we will not be the first to hear about this and any reaction will always be delayed.

The trading floor, brokers, insiders, institutions, hedge funds and others will all know before the news filters down to the non-professionals.
The job of the media is to sensationalise everything that they tell us. If they don’t provide excitement, fast-paced music and flashy graphics, we will not watch the channel.

So whatever we see or hear, remember, we are the last to know. And it is hype.

Focus on price
You know and have heard me say that price is the most important indicator.

The more experience you have with trading, the less you rely on the average common indicators that most traders use. We use our own indicators that are specialised for trading strategies and used when the price action dictates.

I recommend you focus on the buy points based on price and not necessarily an indicator crossing below or above its midline. Indicators are lagging and if you are trying to catch a new trend, an indicator will delay any set up. Remember, indicators are comprised of the OHL or C of price. So when price has made its move, the indicator will begin to think about making its move.

Trade the market based on the primary indicator, price. Excluding volume, everything else is secondary.

Lets go trade!