Friday, August 7, 2015

Looking Inside the minds of Other Traders

[Thoughts from the book: Market Mind Games]

Price depends on Perception.

No matter how you analyze a market or a trade, no matter what your time frame, the only 'thing' you are ever trying to deduce is if other market players will value the asset in question differently in the future.

You make money by correctly predicting the opponent's future prediction - not the "facts".

You are searching for one thing: Why will anyone pay a different price in the future than you are paying now.

Every single price at every single moment now and forever will be only a perception - nothing more and nothing less.

My Notes:

A bit of philosophical thinking comes in. What is trading? When a trader buys, what is he trying to do? He is trying to get inside the mind of another unknown trader who will be willing to buy that instrument at a higher price.

Looking inside the mind of anyone is not easy at the best of times. Trading, is therefore, considered one of the most difficult professions, but new traders treat it as an easy way to make money.

The Real Reason we Love Trading
[from the book: Market Mind Games]

The irresistible seduction of the markets is not the money but the tapping into an innate human urge, desire or force to grow. It strikes at the core of competitive and adaptive instincts and serves up for the taking any unconscious psychological setups one has.

Your psyche does not actually care about your account balance, it cares about your emotional capital because it is your most important asset regardless of whether you are in front of the screen or not.

1 comment:

Anil Sharma said...

Yep got the root of trading psyche.