I find it interesting that VERY FEW people discussing their trades with me ever talk about "the other trader". They always talk about the technicals – the price patterns and (if a little more astute) the strength / weakness analysis.
I get it. That stuff is important.
I suppose I'm guilty of this as well. Most of the time when I write an article or put together a social media post, I tend to focus on the technicals. That seems to be what people want to read about.
BUT… it's "the other trader" which is the most important part of my decision making.
Every time I trade, "the other trader" is at the forefront of my mind.
Who is on the other side of my trade? Are they trapped? Are they feeling stress? Where is the point of extreme stress at which they'll bail out of their position?
Because that's where I want to trade… where someone else is suffering! (Yeah… this business is predatory!)
If I can't feel someone on the other side of the trade getting it really wrong, there is no trade.
The obvious example is anyone fading a strong trend. Who does that? I want to trade against them.
Or anyone trading late on an overextended move into an area of prior strong supply/demand imbalance. Again, who does that? I want to trade against them.
But it's also a factor in all less obvious and less spectacular trades. The boring day-to-day ones that never make it onto articles or blog posts. Let's look at one here:
(For readers of the YTC Price Action Trader, the decision to call a "potential" sideways trend fits under the topic discussed in Chapter 3, Pages 104-107)
If you're not achieving the results you wish to achieve, consider placing more thought towards who is on the other side of your trade.
It may be the paradigm shift you're seeking to take your trading to new levels.