Trades that scare the daylights out of you — and why it's exactly what you need

Can you see yourself buying into the move below? 

It’s a strong, steep rise—the kind of trade you dream about, right?

Now imagine you're a passenger in a car travelling at 50mph/80kmph on the highway, approaching a busy intersection.

The lights are amber, and you see them change to red. But your driver must be in a dream as the car isn't slowing down.

You’re about to run a red light, and it scares the daylights out of you.

Intense fear can happen when you're trading. Felt it?

But if you knew a trade was a car crash waiting to happen, that fear would stop you from entering, wouldn’t it?

In other words, Fear is Good.

Michael Marcus, who amassed an 80 million trading fortune, is famous for saying:

"I have a real fear of markets. I have found that the greatest traders are the ones who are most afraid of the markets."

Are you surprised that great traders are afraid? It debunks the notion of 'being fearless' to trade successfully, right?

Now, let’s revisit our chart.
Based on the steep, strong move to the upside above, you buy 20 lots. No big deal, right?

But suddenly, there's a violent move to the downside—without a buyer in sight.

While you're 'massaging' your exit, the price is slicing through levels like a knife in free fall.

With a 30bps price drop, you're down USD 6K/AUD 9K. If you continue to hold, it's double that.

The chart below shows exactly what happened.

 

Have you experienced something similar? 

Like red traffic lights, there are numerous signs you can learn that tell you:

"Entering 'here' is a car crash for your account waiting to happen."

These signs make such trades avoidable.

In the chart above, you can see two red lights:

1.  A relative value transition at 0.6547 screams out to you, "No Longer Long".

2. Another red light is the absence of buyers 'bidding up' above the Pre-Pro High™️.

Further red lights not visible on the chart relate to market pace, liquidity, and order book activity.

But the only way I know how to illustrate these is to show you during a live trading session.

If all of the above isn't enough to stop you from going long, the price has reached one standard deviation above a volume-weighted average, anchoring it to the downside.

And what do all these red traffic lights represent? Multiple points of evidence.

Just how important is evidence? Here's what high-performance coach to elite traders, Dr Brett Steenbarger says: 

"If everyone engaged in evidence-based trading, there would be no overtrading--"

Multiple points of evidence are crucial in trading because this game is about knowing and seeing what most others don't.

Evidence isn't just about avoiding pitfalls; it's equally powerful for spotting green light trades.

Check out the first trades taken after the avoided car crash trade:

I believe anyone is capable of making these trades once you've learned how to spot multiple points of evidence—but with one important caveat...

Like surfing, playing an instrument, or tennis, trading has its nuances.

You must familiarise yourself with them—and repetition is the mother of mastery.

At first, it might feel out of reach. But as someone for whom trading didn't come naturally—failure can't cope with perseverance.

Maybe you'd feel more comfortable trading if someone could just tell you what to do. And at first, it's the fastest way to progress.

But soon enough, that 'someone' becomes the market itself—once you've learned to read its language through multiple points of evidence.

Do you know why this approach is so effective?

Paying attention to what others miss is not new. As Henry Ford said:

"A handful of men have become very rich by paying attention to details that most others ignored."

Do you now see how you can get off the 'Win Some, Lose More' trading hamster wheel—taking a dramatically different approach from everything that’s failed you so far? And don't worry, you're not starting from scratch. 

To be blunt: You need to experience all of trading's raw emotions before you can learn the points of evidence related to human behaviour.

Trading isn't about fearlessness—it's about harnessing fear to steer clear of disasters. The market speaks; learn its language, and you'll find yourself not just avoiding crashes but mastering the ride. Ready to listen?