Well, it’s Halloween. The time of year when you have to look out for frights and scares around every corner…

While I can’t help you with those fears… I can help you with your fears about trading.

You see, when it comes to trading… some people are just waiting for a scare around every corner, never knowing when it might be…

This will paralyze a trader, making it impossible to pull in profits no matter what they do.

Trading doesn’t have to be scary. In fact, it shouldn’t be scary, and I will show you why.

 

Trading Isn’t Scary

 

Just like in any sport, a lot of traders I know are superstitious…

This comes from the fact that they place some sort of human quality in the markets.

While the players in the market are human… the market itself is not…

The big players in the markets aren’t emotional and don’t see the market as anything but supply and demand… well, they also see a bunch of little guys, who do let the market get at them, to take advantage of…

Around every corner, the market is just waiting to pounce on you right?

Wrong!

The market isn’t alive… it doesn’t know you or your fears.

So why are you so fearful?

Well, it’s because you have misplaced the blame onto the market.

You see, it’s YOU that you should fear… not the market.

How so?

Well, you created these fears in your head.

You get stopped out, and the stock moves back up to hit your target…

Did the market do this just to hurt you? Show you who’s boss?

Of course not…

You did it… you put your stop exactly where all the other retail traders put their stops and the big guys swiped all of you… suckers

To make it as a trader you have to keep a clear mind… and simply be logical…

That way you won’t see the market as “getting you”… you will be able to see the truth and make adjustments.

Next time you will be more aware of what the average retail investor is likely doing and use that to your advantage.

If you think logically, you can trade fearlessly like the big dogs…

And that is all you need to take the fear out trading the market

 

How to think logically and be fearless

 

Start thinking in a simple way, and stop assuming.

Human behavior is a key part of the market, so try to learn a little about it, but keep it simple.

You see, stocks need to “breathe.”  So many times people think a stock should easily trade to a price target for whatever reason…

For example, It beat earnings and it’s headed to $100… 

You buy the breakout on earnings… next stop $100, right? That’s black and white… but that’s not the market.

So first it spikes to $98, with a quick retrace to $94, only to head up to $99, and then roll down to $97… maybe 2 days later it hits $100.

What happened?  You may have been stopped out even though it hit your target… even worse, you may have gotten whipped around losing multiple times…

Why is this?

Because the stock needs to “breathe”

So let’s fix this… it’s not the market out to get you… you are being emotional and not thinking clearly.

Think logically… 

 

1st – What do we know about the big money?

 

Well, they have a lot of money to move… just think about that?

A small trader sees it black and white… buy the breakout and it’s gonna hit 100… you see it’s pretty easy to pick up 1,000 shares of a stock at the market…

Well, that’s not the case for a hedge fund… You see, they need to get 20 million into that stock at a decent price… so how are they going to do it if the stock jumps straight to $100…

They aren’t… so why do you think we see the big swings in the price?

These guys are buying it up then letting it fall to get a better price… over and over… they are pushing it around to get the retail traders in and out as well…

 

2nd – What do we know about the retail traders?

 

Well, they are emotional… they don’t think logically… they overreact… and they all have the same ideas- stops in the same place, etc.

And the idea that the stock should go straight to $100?  That’s a recipe for disaster…

Falsely believing things like this is the reason many traders load up and place stops that are too tight… they just think this thing is ready to blow, so no worries…

Well, the institutions know this… so to get the prices they want, all they have to do is push the price around in big enough swings to stop all the little guys out and take their shares at a steal of a price.

So how do we use this to our advantage?

Easy!

Just take all of that into account when planning your trades… expect the swings and plan your trades accordingly… as in don’t place your stops with all the retail guys… and don’t take too much size to have a reasonable stop in the first place…

One option is to play the swings… take a partial position with a logical stop… not a retail one…

Then instead of being scared or stopped out on pullbacks and swings… add/ layer into the rest of your position with the big money traders…

There is nothing scary about the “market.”

Just think with a clear head… think about the humans in the market, not the market as a human… and trade with a simple and logical thought process.

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