Back in my prop shop days, there were a whole heap of seemingly over-used clichés. Today, the market reminded me of one. “The market is always right” I’d hear someone call (usually after a loss and vocally cursing my luck). “Great” I’d think. “Someone rubbing it in is just what I need after that hit!” However, with a considerably greater level of trading experience, these days I’m able to appreciate the real meaning of this trading truth and react better to what happens next

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2. Back in my prop shop days,
there were a whole heap of
seemingly over-used cliches.
Today, the market reminded me of one.

3. "The market is always right“
I'd hear someone call (usually after a loss and vocally cursing my luck).
"Great. Someone rubbing it in is
just what I need after that hit!"

4. With a considerably greater level of
trading experience, these days I'm
able to appreciate the real meaning
of this trading truth and react better to
what happens next.

5. Today we had the ECB rate
decision and press
conference with Mr. Draghi.

6. I'd learnt a long time ago that
with news it's more important
to see what the market does
than whether the news is
bullish or bearish in itself.

7. Draghi definitely seems to be pretty
dovish on rates and accommodation
levels (at least to me) - which in
theory, is supportive to the economic
recovery.

8. Initial Jobless Claims comes in
better than expected.
I was trading the FESX with one
eye on what the ES was doing.
The markets looked like they
wanted to try to test higher but
they just couldn't manage it.

9. Generally, the way a price
discovery-based auction works is
that a market tests one way and
when it finds enough opposing
activity, it reverses and tests in
the other direction.

10. In this case, the fact that the
markets seemed to want to push
higher but couldn't and that there
were likely to be longs getting
trapped, my opinion (and trading)
switched to a short-bias.

11. Another test higher in the ES without
making new highs for the day,
followed by a quick break back
down, only strengthened my view
that the bulls were in trouble. So I
hammered away at the FESX bid.

12. "Why the $%!& can't this
hunk of junk just sell off!!!"
I'm thinking whilst trying to
remain calm.

13. The ES was pushing lower and
obviously was about to dump, so
what on earth was going on with
the Stoxx?
This is where I backed off.

14. The very fact that I was
beginning to get agitated with
the lack of a gargantuan selloff in favor of my shorts, told
me that my judgment may
have been compromised.

15. "There's still NFP's tomorrow and if this
sell-off does continue, I'll jump back in
when the market shows its hand“
There's no sense in fighting the market
the market does what it does and is
always `right'.

16. The FESX did eventually break after
another 30mins or something and really it
didn't trade back higher much at all
before it broke lower, hanging on to my
shorts made no sense whilst I was
becoming annoyed with the market.

17. Not only could I not be certain that I
hadn't missed something, but I also
have learnt to the detriment of my
account balance over the years, that
days where there's a decent amount
of movement can make or break
your month.

18. Hanging on will sometimes net
you some great winners, but
often you'll get punished with a
string of capital sapping losers as
you fight in vain to pull your day
back.

19. Knowing when to hang on is the
key - and it's when emotions
creep in that logic, objectivity and
judgment go out the window,
making it far more difficult to
figure this out.

20. Not only by understanding, but also
by respecting the fact that whatever
the market is doing at any given
moment is right no matter what it
looks like it should do, you can
protect yourself from getting dragged
into irrational trading.

21. Trading by the simple phrase
"the market is always right"
gives you the chance to emotionally
detach yourself from your losses (or
positions that aren't getting to their
targets) and take a step back.

22. On days where it really
matters, even if the market
does eventually `see sense',
there's always likely to be
another opportunity to get
into a great trade.

23. When the market doesn't and
if you've already
decided it's wrong,
prepare to be dealt a financial
and emotional beating.

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