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Be In Harmony with the Market

We make money trading when we are in harmony with the market. We are long

when the market is going up, and short (or out of) the market when it is going

down. If we bring an opinion with us while trading, we will end up fighting the

market. We keep trying to go long as the market is declining, or we keep shorting

a market that it is in a bull phase.

DON’T FIGHT THE MARKET

Fighting the market is not good for two reasons. First, we lose money. How much

we lose depends on how well we are managing our money and controlling our

risk. Second, fighting the market affects our judgment, and causes us to try to

confirm that our judgment is correct, or persist in fighting a trend so that we will

eventually prove to be correct. We figure that if we persist long enough, no matter

how long it takes, we will eventually be right.

The same can be said for being in a canoe in a river. There is a reason for leaving

your car downstream, launching your canoe upstream, and paddling downstream.

It is much easier and eminently more fun to go with flow and paddle downstream.

We could do the opposite and paddle upstream. Eventually we may even get to

our destination, but the cost would be substantial. It would take much more time,

more physical and emotional stamina, and we would be constantly fighting the

current. Reaching the goal would not be worth the cost.

Even if you ultimately make money fighting the market, it is not worth the price

you have to pay, both financially and with peace of mind.

LET THE MARKET TELL YOU WHAT TO DO AND WHEN

The correct attitude for successful trading is to let the market tell you what to do.

If the market says to go long, buy, and if it starts to go down, sell. This sounds

easy but it is much more difficult than you think. We always like to believe that we

can be in control. We want to be in control of our trading and of the market. If

you accept the notion right now that you cannot control the market, that all you

can control is your execution of trades, you will take a great step toward being a

successful trader.

Instead of trying to control the market, let the market tell you what to do. Let the

market and your strategy take you long rather than you personally trying to predict

or decide when to go long. Let your strategy take you out or get you short. Once

you realize that you can’t understand the market, and that you can’t predict when

the market will move, you will move into that detached state of mind where you

let the market take you where it will when it wants to.

THE MARKET GIVES AND THE MARKET TAKES AWAY

To remove your personal biases and let the market tell you what to do is to give

up control, to give up the notion that you are actually in charge of how much

money you make. For profitable trading, you need to move into the mental state

of letting the market determine the profits, not you. It won’t be whether you

predict the market correctly that determines the profits, but whether your strategy

is in a profitable mode or drawdown mode as determined by the market.

So, let the markets tell you what to do based on your strategy. Let it get you long

and put you short. Let the market determine how much money you are going to

make. Trade your strategy and let the market do the rest. And know that the

market gives money and the market takes away money. Your goal should be to
develop a strategy that gives you more money than it takes away.

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