Market Overview

You Need To Ask Yourself This Key Question


It is the one I use on our DVD course, as well as in-person trainings, “If I had no money in this play, would I be executing a buy or sellactionat this moment, based on objective observations?

1If the answer is a buy action; if I have no position, I buy to get long exposure.

2If the answer is a buy action; if I have a long position, I do nothing or buy more long exposure.

3If the answer is a buy action; if I have a short position, I buy to cover.


4If the answer is a sell action; if I have no position, I sell to get short exposure.

5If the answer is a sell action; if I have a short position, I do nothing or sell more short exposure.

6If the answer is a sell action; if I have a long position, I sell to exit.

Then, the only thing you need is an objective decision support model that gives acts in a way that the above protocol results in growing capital over time.

If you dont have that model, the question tree wont workIf you dont have the question tree, the model wont work, as youll continue doing the same action eventually at the wrong time.

Notice that no where in this process does profit or loss come into playThat is because the market doesnt care about your moneyIt only gives you clues to follow along the path of staying in sync or not with itEgo, profit/loss status, etc. are counter productive inputs to the logic of objective decision supportIf you operate the process to perfection, you will always get small losses and large gains, in either directionThe profits and losses will be the result of efficient and perfect operation of the process, rather than a counter productive component of the process itself.

Therefore, emotions will be removed from the money; a goal that every successful trader strives to accomplish; and fails 99% of the timeWhyThis is due to the doubt that most traders have in their decision support modelWhen they reach their point of maximum pain, they doubt the model, and act against it, exactly when they should be acting with itThat leads to a string ofI knew I shouldainstances with the benefit of 20/20 hindsightThey end upshouldingall over themselves, resulting in a stinky mess in the trading accountDoes this sound familiar?

That is why I use my DSE, every time, all the time, only it, nothing else, right or wrong, win/lose/draw, even when really wrongWhyBecause, usually when really wrong, it wasnt the DSEs fault, but my own operation of the process along the question-tree path, due to my human weaknesses of ego, greed, and general emotionalityTo the extent I can minimize those human attributes, my trading outcome improvesIts just that simple, for me, which is why I do what I DO, and not what anyone else on the planet doesIm not saying its the only way, best way, or that there arent many other ways that are equally good or betterIm only saying this is my way, and that is the only thing I do.

The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: Markets


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