See where most of the people look? That is precisely what crowd behavior is all about. Traders can do well if they avoid following the crowds.
The other day I saw this sushi restaurant. Sushi is to Australia what Mexican is to the United States… it is everywhere, and often quite good and cheap.
But what was most interesting was the worn out floor boards. You could clearly see where everyone had stood and gawked at the sushi. This spot was worn out because all of the patrons had stood there.
I thought about traders and how we can also go where other traders go, and follow their lead. I think this is usually a big mistake. Rather than do what other traders do, I would be much happier to do the opposite.
And this is how we traders get paid! By not following the crowd. After all, if you wanted to follow the crowd, you would simply get a “normal” job, work all day and then hope to catch up with your family and friends on the weekend… that would be following the crowd. But as a trader, you are after something more, you don’t want to miss out on life, and this is why you were attracted to trading… does this sound like you?
It may – because that is the attraction to trading for many traders. The freedom to enjoy life without being tied down to a job (and a desk, or a workplace). Traders today can literally trade from anywhere, and we can trade in a way that allows the trades to unfold without watching the charts.
But in order to bag consistent profits we traders must pay attention to what everyone else is doing and try and do the opposite. If you have no idea how to do this, I would suggest watching this short video on how to find out what the large crowd of traders are doing (so you can do the opposite).
