In our Anglo-Saxon, Cartesian driven advanced industrialized world, facts rule. Whether you are a Google engineer, a designer for Apple or just a regular joe schmoe -- your life is governed by the physical reality of the world around you. As Nate Silver proved with his 2012 election call knowledge of facts is what separates winners from losers in modern society. (Are you listening Dick Morris?)
Not so in trading. In trading facts don’t matter at all. There is nothing more amusing than watching an earnest well reasoned analyst provide a thorough factual argument for his position only watch that position lose money day after day after day. This is such a common occurrence across all asset classes that almost every investor makes the same mistake.
The reason is simple. In financial markets we don’t trade facts, we trade feelings. And feelings as every parent of a teenager knows, can change on a dime. That’s why when you approach financial markets you must never allow facts to get in the way of making you money. As the great Richard Pryor once said, “Who you gonna believe? Me or your lying eyes?”
It is incredibly easy to get married to your thesis when you trade. After all in real life we are taught to stick to our guns, to hold our convictions, especially when we have the facts on our side. But trading is not real life. In fact it is often the opposite. In real life we are taught to be industrious, faithful and reflective. In trading it helps to be mercenary, promiscuous and instinctive.
In trading nobody cares if you were right about US NFP figures. Nobody cares if your US growth thesis was correct. The only thing that matters in the end is whether your analysis led to a profitable trade. If it did, good job. If it didn’t change your analysis -- don’t try to change the market. As I have said a million times when price disagrees with the news -trust price.
Remember in the financial market you can be 100% intellectually correct and still lose all of your money. That’s because in trading you only make money when the market -- not the facts -- agree with you. To win in trading never let facts stand in the way of feelings. And remember, this ain’t real life, its just trading.
Not so in trading. In trading facts don’t matter at all. There is nothing more amusing than watching an earnest well reasoned analyst provide a thorough factual argument for his position only watch that position lose money day after day after day. This is such a common occurrence across all asset classes that almost every investor makes the same mistake.
The reason is simple. In financial markets we don’t trade facts, we trade feelings. And feelings as every parent of a teenager knows, can change on a dime. That’s why when you approach financial markets you must never allow facts to get in the way of making you money. As the great Richard Pryor once said, “Who you gonna believe? Me or your lying eyes?”
It is incredibly easy to get married to your thesis when you trade. After all in real life we are taught to stick to our guns, to hold our convictions, especially when we have the facts on our side. But trading is not real life. In fact it is often the opposite. In real life we are taught to be industrious, faithful and reflective. In trading it helps to be mercenary, promiscuous and instinctive.
In trading nobody cares if you were right about US NFP figures. Nobody cares if your US growth thesis was correct. The only thing that matters in the end is whether your analysis led to a profitable trade. If it did, good job. If it didn’t change your analysis -- don’t try to change the market. As I have said a million times when price disagrees with the news -trust price.
Remember in the financial market you can be 100% intellectually correct and still lose all of your money. That’s because in trading you only make money when the market -- not the facts -- agree with you. To win in trading never let facts stand in the way of feelings. And remember, this ain’t real life, its just trading.
Editors’ Picks
EUR/USD climbs to daily highs near 1.1820
EUR/USD now picks up pace and advances to the area of daily peaks north of the 1.1800 barrier at the end of the week. The pair’s decent move higher comes against the backdrop of a generalised lack of direction in the FX galaxy and the mild offered stance in the US Dollar.
GBP/USD trims losses, retests 1.3460
After briefly challenging its key 200-day SMA near 1.3440, GBP/USD now manages to regain some balance and revisit the 1.3460 zone on Friday. Cable’s pullback comes as the selling pressure on the Greenback gathers traction, reigniting some recovery in the risk-linked space.
Japanese Yen gives back half of early gains against USD ahead of US PPI data
The Japanese Yen (JPY) surrenders half of its early gains against the US Dollar (USD) during the European trading session on Friday. The USD/JPY pair rebounds to near 155.90 as the JPY falls back, but is still 0.15% down.
Editors’ Picks
EUR/USD: Fed calm, ECB steady, but the Dollar still leads Premium
EUR/USD is still struggling to find real traction. The pair has tried to stabilise, but momentum keeps fading, leaving the door open to further weakness.
Gold: Falling US yields, geopolitics help XAU/USD hold ground Premium
Gold (XAU/USD) gained traction and climbed above $5,200, ending the fourth consecutive week in positive territory. The next round of US-Iran talks and crucial macroeconomic data releases from the US will be watched closely by market participants in the short term.
GBP/USD: Will Pound Sterling defend key 1.3450 support ahead of US jobs data? Premium
The Pound Sterling (GBP) entered a bearish consolidation phase against the US Dollar (USD), after having tested critical support near the 1.3450 level on several occasions.
Bitcoin: Another month of losses, and it’s been five
Bitcoin (BTC) price is stabilizing around $68,000 at the time of writing on Friday, but the Crypto King is poised to close February on a fragile footing, marking its fifth consecutive month of losses since October and a rare start to the year with back-to-back monthly corrections.
US Dollar: At a crossroads; Fed steady, tariffs in flux Premium
The US Dollar’s (USD) upward momentum from the previous week seems to have encountered a tough nut to crack in the 98.00 region, as measured by the US Dollar Index (DXY).
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