Just following up on Jupiter's last post.
No, the market is not random, but yes, it is unpredictable.
It is not random because there are patterns which repeat themselves over and over and once recognized can form the criteria for placing trades. If it were random, nothing would repeat itself, nothing would be recognizable from what went before except by pure chance, and the markets would be impossible to trade, or rather, each trade would be a simple 50/50 gamble, which is not the case with trading, at least it shouldn't be.
It is unpredictable because despite patterns and set ups repeating themselves, the price will never behave in exactly the same way it did before. This being a fact, we can still put on a consistently higher number of winning trades than losing ones despite the unpredictability, because as long as we can recognize this repetition of patterns, we can be certain that the outcome we desire will produce favourable price movement a greater number of times than it does not. We will always have losing trades, but as long as we have a sound system in place designed and built from our own observation of and interaction with the markets over a long enough period of time, we will come out ahead after a given number of trades. This is why the key to success in this business is to completely detach ourselves from the importance of any given trade, because each trade is irrelevant to the final outcome. We must learn to think in blocks of ten or twenty trades, not in two or three. Of course, the human brain is not programmed to think like this which is why most people find trading so difficult to master, but if we are to be successful, we have to recondition our brains to think like the top traders do, but this is not easy, and takes time.
And one more thing I'd like to say, which I have covered before in this thread, and that is the importance of a system. We simply have to have one in place. It is no good thinking to ourselves that the price looks like it is going to go up or down so I'll take a pot at it, because this will just result in losses, 100% guaranteed. Therefore, what we have to have is signals, signals which tell us whether to take a trade or not. If the signal is there, take the trade - if it is not, don't. This is hard because I know a lot of people trade off of gut feeling, or just because they think the price is going to move one way or another, but unless we have those definite signals in place, those green, amber and red lights, we can never succeed in this business over the long term.
No, the market is not random, but yes, it is unpredictable.
It is not random because there are patterns which repeat themselves over and over and once recognized can form the criteria for placing trades. If it were random, nothing would repeat itself, nothing would be recognizable from what went before except by pure chance, and the markets would be impossible to trade, or rather, each trade would be a simple 50/50 gamble, which is not the case with trading, at least it shouldn't be.
It is unpredictable because despite patterns and set ups repeating themselves, the price will never behave in exactly the same way it did before. This being a fact, we can still put on a consistently higher number of winning trades than losing ones despite the unpredictability, because as long as we can recognize this repetition of patterns, we can be certain that the outcome we desire will produce favourable price movement a greater number of times than it does not. We will always have losing trades, but as long as we have a sound system in place designed and built from our own observation of and interaction with the markets over a long enough period of time, we will come out ahead after a given number of trades. This is why the key to success in this business is to completely detach ourselves from the importance of any given trade, because each trade is irrelevant to the final outcome. We must learn to think in blocks of ten or twenty trades, not in two or three. Of course, the human brain is not programmed to think like this which is why most people find trading so difficult to master, but if we are to be successful, we have to recondition our brains to think like the top traders do, but this is not easy, and takes time.
And one more thing I'd like to say, which I have covered before in this thread, and that is the importance of a system. We simply have to have one in place. It is no good thinking to ourselves that the price looks like it is going to go up or down so I'll take a pot at it, because this will just result in losses, 100% guaranteed. Therefore, what we have to have is signals, signals which tell us whether to take a trade or not. If the signal is there, take the trade - if it is not, don't. This is hard because I know a lot of people trade off of gut feeling, or just because they think the price is going to move one way or another, but unless we have those definite signals in place, those green, amber and red lights, we can never succeed in this business over the long term.
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