When I first started trading, I thought it was important for a trader to always know what the market is doing. After all, if I am going to be a professional trader, I should be able to sit down and decide whether it is time to buy or sell. Today, I see trading in an entirely different light. Today I know that on most days I will not have a trade.
When I look at the markets now I decide whether the market is offering an unbelievable trading opportunity, and opportunity to buy or sell the market because a high probability trade setup is sitting there on the charts. Most of the time the markets show me nothing, but once in a while the markets give me a great opportunity. In fact, one of my criteria for a trade setup is that the market offers an opportunity that I simply cannot pass up. When this occurs, I take the trade.
Planning a trade and planning a holiday are quite similar.
Trading is a bit like planning a holiday. When the market prints a particular pattern, we should have a plan for whatever the market does. In other words, I could look at the market and see a bullish pattern, and if the market starts to trade higher I take a buy trade. But if the market trades lower I take a sell trade because the market has now printed a failed bullish pattern. And if the market drifts, not really going anywhere, after the bullish pattern, I may decide to stay out of the markets. In this way I know what I am going to do, and I am waiting for the market to confirm my theories on what will likely take place in the market.
I need to be flexible and open to new information, just like a tourist planning a holiday. Perhaps you go to a foreign country and plan on visiting a famous museum. But what happens if the museum is closed? You need a back up plan. Likewise, if you are planning on sailing one day on your holiday, what happens if there is no wind that day? Or if you decide to go to the beach one day, but a hurricane shows up, this would change your mind.
The markets are no different, we should be open to new information, and adapt to it when we are trading. This means coming up with a plan for any possibility, and then sticking to that plan.
