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my beliefs is that it is a waste of time to attempt to explain why the market did this or that. I am far more interested in what the market is doing right now. I am really interested in determining what the probable direction of the market might be. The reason I never predict the market, and instead work in probabilities, is that if I predict, I am putting a certain amount of emotional energy into the prediction and my ego starts to get involved. When I work in probabilities, my ego is barely involved, I have acknowledged that the markets are unpredictable, and I am emotionally detaching myself from the action of the market. |
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Highly successful traders believe that the market is totally unpredictable, and that the market represents all the beliefs, perceptions, and fears of participants in a given instant of time. Consequently, occasional losses are to be expected. Successful traders also believe that the market doesn't owe them any validation of their perceptionsit just flat out doesn't care. They believe that the market is always right, and that consistent losses indicate their perception is wrong. This requires them to question their beliefs and where they are focusing. They must then change the disempowering beliefs so they become empowering. Since the market is always right, and they have no expectations of the market (only of themselves), loss has no emotional feelings linked to it. |
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Successful traders believe that the amount of loss can be reduced by using strict rules that have been validated through testing. They are willing to be flexible in looking at new ideas that could affect their perceptions. A loss has no negative emotions linked to it because some loss is unavoidable and is the natural consequence of trading. In short, successful traders have no negative emotions linked to loss because they have totally accepted responsibility for their own actions. They have accepted in their very being that trading demands working in probabilities. Thus occasional losses are to be expected. |
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Contrast this approach with the most common beliefs of novice traders: that the market can be analyzed and predicted, that it is reasonable, and that market action repeats. Consequently these traders have a lot of expectations. When they experience a loss, they experience pain. Novice traders invariably believe that the way to avoid feeling any pain is to become more knowledgeable about the different methods of analyzing the market. Consequently they invest even more time and emotional energy into discovering the "underlying truth" about the market. They create even more expectations. Naturally enough, this creates more pain as the losses continue. Novice traders do extensive work to obtain more information so that they can devise a better methodology; however, they do not consistently |
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