I sent out the following social media post last Saturday:
All-time highs in the NASDAQ! Incredible when you consider where we were just two months prior. And of course when you consider the current state of the world.
But that's the nature of markets. They don't care what we think.
So I thought I should expand upon two of the statements within that post.
"Are you able to reframe your beliefs to allow you to operate more effectively?"
"Can you separate your narrative about the world from your job of recognising and adapting to the actual market bias?"
Because, as an intraday trader, one thing that is absolutely devastating to your P&L is attempting to trade a personal feeling that is not aligned with the actual direction of the markets.
I can completely understand anyone who feels that "This market is so overbought. It doesn't make sense. The crash is coming for sure. This thing needs to go down."
I've been there myself.
And the feeling is not a problem. It's acting upon that feeling that is the problem.
It's positioning short when the market just continues on higher, caring little for you, your beliefs and your long-term viability in this trading game. That destroys accounts.
So the rally continued. Here's the NQ at the time of writing this article, about eight hours before the open on Thursday morning.
Success in intraday trading requires that you find some way to separate your FEELINGS about the market from your ACTIONS in trading the market. Leaving you free then to trade whatever direction the market moves, despite your underlying beliefs.
Here's a simple method I use:
Shift your beliefs and expectations further into the future.
In three steps:
(1) "I feel that this is so overbought that it just has to fall."
(2) "But that doesn't have to happen today. Maybe tomorrow. Maybe next week."
(3) "Today – anything can happen!"
So not only do I acknowledge my feeling and belief about potential market movement. I also allow it to be true.
But not necessarily today.
This frees me up to accept, recognise and adapt to whatever direction the market wants to go.
As shared in Wednesday's social media post:
Repeating for emphasis – "Being open to all three possibilities allows me the flexibility to adapt to actual market conditions. And to recognise and adapt to changes in sentiment and structure."
Because today (and in fact every day) – anything can happen.
Right now it's several hours before the open on Thursday. The markets feel even more overbought to me. But that doesn't mean it will fall today. It might. But it could also wait till Friday. Or maybe next week.
Today, anything can happen.
Becoming stuck in a mindset that the market SHOULD do one particular thing, just because you FEEL that it should, is poison to your account balance.
You have to find a way to separate your feelings about the market from your actions in trading that market. And then allow yourself to be open to all possibilities, ready to recognise and adapt your trading to the ACTUAL market conditions.
This is the plan that works for me – shifting my expectations forward in time. Hopefully it helps you as well.
PS. Thursday update:
There's the fall I was expecting…