Trade what you see. All traders are always encouraged to adhere to this golden liner. But why is it so difficult to execute? Human beings are governed by our values and beliefs in society and we are subjected to prejudices and bias. It works the same ways in trading when traders attempt to interpret price actions.
Trading is very subjective. A trader with bearish bias would see a chart differently from that of a bullish trader. Let's take a lot at two examples:
SOL (daily chart):
BAC (weekly chart): Same candlestick different interpretation.
Recommendation: The sensible and savvy trader should be on the sidelines in cash position as the stock can go either way. Careful observation of the general market trend should also be adhered to as well. He should be trading the breakout either upwards or downwards. Well... trade what you see but its really easier said than done. Discipline, patience and risk management are the 3 most important traits which we should strive to achieve.
Have a great day ahead!
Trading is very subjective. A trader with bearish bias would see a chart differently from that of a bullish trader. Let's take a lot at two examples:
SOL (daily chart):
BAC (weekly chart): Same candlestick different interpretation.
Recommendation: The sensible and savvy trader should be on the sidelines in cash position as the stock can go either way. Careful observation of the general market trend should also be adhered to as well. He should be trading the breakout either upwards or downwards. Well... trade what you see but its really easier said than done. Discipline, patience and risk management are the 3 most important traits which we should strive to achieve.
Have a great day ahead!
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