Intelligent trading is also knowing when not to trade!
When a sailor enters out into the ocean they must be aware of the weather conditions. The weather is what will dictate how their ship will be able to navigate through the waters. If the winds are blowing too strong and the waters are too dangerous they will likely consider a different route or delaying their voyage until conditions are more favourable. When it comes to the markets, that ship is price and the ship is always in the ocean moving from port to port. We have to decide whether we want to board the ship for the ride or not. When you start to look at the markets through this perspective and you start to train your mind to see all the supply/demand zones/structures and support/resistance and trend lines as the elements that make up the “weather”, you’ll start to see how you can determine if the conditions are right to board the ship and enjoy a safe passage through to your destination. Not being able to determine this is one of the main reasons why traders get themselves in many difficult situations. What at first seemed like a clear sail to a destination turns in to a hellish voyage through rough seas and high winds, only to push your ship in directions you never expected, thus creating drawdowns you never saw coming.
I always make it a point to review the performance of other traders that I follow and I look for where they are having trouble and where they are doing well and over the last month I’ve seen many traders drawdown their accounts significantly. Then I look at what the markets been doing during this time and I can clearly see what it was that caused these drawdowns. Many traders are looking at the same patterns, patterns that indicate that a trade in a specific direction is favourable but what is not understood is how the markets algorithms have been programmed to create these patterns. Just like the casino games will allow you to win sometimes, overall the game works against you the more you play and as traders we are always in this game to open trades and profit, so you can image how the markets are setup against us being consistently profitable. There are card counters that are able to see the cards being dealt in a game of Blackjack and they can determine when to get in and when to stay out. A professional trader must be able to do the same thing, only we have a great advantage as we will not be kicked out of the markets for doing so! Trade smart!