Expectations poison good trading

What is the market doing?  And how can I participate, while controlling my risk/reward?  Those are constructive questions to ask, while hawking markets.

Even profitable traders can forget to focus on these questions.

I had a conversation with a top trader, with whom I work, who recognized he was projecting expectations into this trading.  His month was off to a slow start.  It could have been better.  But he was getting in the way.  This trader thrives by being aggressive, but he also needs to be patient.

This trader had thoughts about how markets would trade before and after the French election.

This trader had thoughts about how the market should trade during earnings season.

These expectations hindered the trader this month.  He called for an adjustment in his daily review to follow what the market was offering and take that.  For the active trader, expectations poison good trading.

Another experienced trader gave himself a D for his trading during a recent session.  Again, it was his expectations that were the problem.

Specifically, trader added to losing positions based upon what he expected the market to do.

Is your standard for making trades based on what you think the market/stocks should do?  Is that the best standard for the active trader?

In my mentoring, I offered this to the trader above:

I would suggest a more effective standard

what is the market doing after this announcement

it’s not what you think the market should do.  it’s what the market is doing and where you can participate,

while controlling your risk/reward.

In my own trading, I have been guilty of expectations clouding my trade decisions.  I expect that I will have to keep watch of this issue in the future as well.  For the active trader, expectations poison good trading.

As always, I welcome your feedback- [email protected]

*no relevant positions

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