Who Are You Trading Against?


Armstrong Economics Blog/Basic Concepts Re-Posted Apr 21, 2021 by Martin Armstrong

QUESTION: Hi Marty,

hope your are doing well.

I have some question regarding trading to you.

Why is this game mentally and physically so hard to learn… normally every trade has a 50:50 chance but if I enter the market everything is going „different“. Just trade against me and you will become even much richer, its crazy!

I think my biggest mistake is to enter a trade way too early … when I read the market could turn (maybe in 2 weeks) my reaction was /is „going short immediately“ – its just so dumb – but that is what brought me the heaviest losses this year. Shorted the DOW from the 30k level again and again.

Socrates is like a market navigation – I know that – and when the navy says right I drove left – always in fear the market could crash like last February.

maybe you can wright a bit more on your blog – what were your easiest secrets to become a successful trader. maybe a sample account which etf´s / stocks are promising for the rest of 2021 or some live trading sessions via chat on your socrates platform.

Sorry for disturbing you again and again – but I know you are the only man who really know how this game works and you might understand my „little“ problems. BTW: nice call for the top in Bitcoin !!!

THANK YOU

Have a good day and best wishes.

O

ANSWER: The most common problems in trading have been (1) over-trading and (2) anticipation.

Many think they are limiting their risk by trading too frequently. They do not want to risk, say $100, so they continually anticipate a trade and lose $20 ten times in a row. The real secret to trading is recognizing that your opponent is really yourself.

The problem with systems that require human judgment is that they expose your human frailties. Whether it is looking at technical patterns, candlesticks, or wave patterns, all of these forms of analysis require experience and whether you have a natural tendency to be artistic. Those who have an artistic eye can see patterns easier than those that do not. They will see a face in a cloud shape, but others will say they are nuts as it’s just a cloud.

The key is to try to eliminate that human judgment as much as possible. You only need to look at the setup when the price is reached, but during the time target. The monthly Array pinpointed April since the start of this year. Then you look at the Weekly, and it targeted last week with a Directional Change and higher volatility starting this week. Then look at the Daily level. This way, you are not looking at patterns yourself and acting on a hunch. Even the Global Market Watch came up with April as a possible important high, and that is just a pattern recognition model.

With every trade, you must always define where you are RIGHT and when you are WRONG. There are no DEPENDS once you put on a trade. We only have a DEPEND in the setup. Did it reach the time and the price? Other than that, once you are in, some people hate to take the loss because it is acknowledging they were wrong. If you have the setup, then selling against the high on that target week or day with a stop above that high makes sense, and it is a lower risk. If you think it will crash, so you keep selling on a hunch, you will lose.

Consequently, people who are into gold and just blame others because gold has not rallied as they expected are simply people who will never learn how to trade. Mistakes are important. We pay dearly for them, so pay attention. That is how we learn and advance in life. Every parent tells their child not to stick their finger in the flame of a candle. We all do. We have to learn for ourselves.

Remember, you are your real opponent. So make peace with yourself. Come to a truce.

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