It's-all-too-common
It's a universal experience. You feel personally attacked or demoralised when it happens, correct?
The good news is there's a solution, which I'll share in a minute. But first, knowing the issue is key to understanding the solution.
Lost on traders is:
Trading is not waiting for a pattern or setup to appear to enter the market—that's amateur hour.
Instead:
Imagine you're a detective solving a crime. You start by gathering evidence and—like a puzzle—putting the pieces together to form a plausible thesis.
The same applies to trading. But instead of solving a crime, you're solving:
- Who's going to move the price?
- Why will they move the price?
- Where will they move the price to?
What do you notice about the questions above? They're focused on the actions of human beings, and for good reason.
If not familiar, the Medallion fund is famed for the best record in investing history.
It's a fund that trades using computer-programmed models. Founder Jim Simons revealed:
"We don't want to predict price, but we want to predict when other market participants are going to do something."
Cycles, sectors, technology, and market activities are always changing, which is why trading strategies have short shelf lives.
The only approach built to last is rooted in human behaviour because human beings don't change.
But what about playbook trades?
Let me explain:
You did or still travel the same route to and from work.
But ignoring the time they take, there are alternative routes you can choose.
Price takes different routes from one price level to another regularly. Each signature trade is a map of a one of the routes price can take.
If and when the market starts agreeing with your thesis, choose the signature trade matching the current route.
Now you have accurate directions to trade your thesis. Make sense?
A note on human behaviour:
You can pay experts on human behaviour who'll tell you everything there is to know about:
- Unconscious bias,
- What happens at a brain-chemical level and,
- How it impacts decision-making.
But ask them to show you all the different ways it's expressed in the markets, and it's... crickets.
Yet the footage below is your front-row seat to a trading approach rooted in human behaviour.
Human beings don't change, so these principles have always been effective and will continue to be so in the future.
Now's the perfect time to cement your understanding of how effective trading is when based on human behaviour with the 3 minute demonstration below.
Forex and derivatives trading is a highly competitive and often extremely fast-paced environment. It only rewards individuals who attain the required level of skill and expertise to compete. Past performance is not indicative of future results. There is a substantial risk of loss to unskilled and inexperienced players. The high degree of leverage can work against you as well as for you. Before deciding to trade any such leveraged products you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with trading on margin, and seek advice from an independent
Editors’ Picks
EUR/USD tests nine-day EMA support near 1.1850
EUR/USD inches lower during the Asian hours on Monday, trading around 1.1870 at the time of writing. The 14-day Relative Strength Index momentum indicator at 56 stays above the midline, confirming improving momentum. RSI has cooled from prior overbought readings but stabilizes above 50, suggesting dips could stay limited before buyers reassert control.
GBP/USD flat lines as traders await key UK macro data and FOMC minutes
The GBP/USD pair kicks off a new week on a subdued note and oscillates in a narrow range, just below mid-1.3600s, during the Asian session. Moreover, the mixed fundamental backdrop warrants some caution for aggressive traders as the market focus now shifts to this week's important releases from the UK and the US.
USD/JPY stays firm around 153.00 after Japan's Q4 GDP miss
USD/JPY kicks off the new week on a positive note as Japan's weak Q4 GDP growth tempers bets for an immediate BoJ rate hike and undermines the Japanese Yen. Investors, however, seem convinced that the BoJ will stick to its policy normalization path amid hopes that PM Takaichi's policies will boost the Japanese economy. In contrast, cooling US consumer inflation reaffirmed bets for more Fed rate cuts in 2026, which acts as a headwind for the US Dollar and should cap the currency pair.
Editors’ Picks
AUD/USD defends gains below 0.7100 amid the Fed-RBA divergence
AUD/USD attracts some dip-buyers near mid-0.7000s during the Asian session on Monday, stalling last week's modest pullback from a three-year peak. The US Dollar continues with its struggle to attract any meaningful buyers amid bets for further rate cuts by the Fed, bolstered by the softer US CPI report on Friday. In contrast, the Australian Dollar retains a bullish bias on the back of the RBA's hawkish stance, which further acts as a tailwind for the currency pair.
USD/JPY stays firm around 153.00 after Japan's Q4 GDP miss
USD/JPY kicks off the new week on a positive note as Japan's weak Q4 GDP growth tempers bets for an immediate BoJ rate hike and undermines the Japanese Yen. Investors, however, seem convinced that the BoJ will stick to its policy normalization path amid hopes that PM Takaichi's policies will boost the Japanese economy. In contrast, cooling US consumer inflation reaffirmed bets for more Fed rate cuts in 2026, which acts as a headwind for the US Dollar and should cap the currency pair.
Gold buyers hesitate amid holiday-thinned trading
Gold trades volatile, but within range, as US, China holidays-led thin trading exaggerates moves. The US Dollar extends range play into the US GDP week, with markets pricing at least two Fed rate cuts this year. Technically, Gold tests key support at $5,000; daily RSI still remains bullish.
Top Crypto Losers: Dogecoin, Zcash, Bonk – Meme and Privacy coins under pressure
Meme coins such as Dogecoin and Bonk, alongside the privacy coin Zcash (ZEC), are leading the broader market losses over the last 24 hours. DOGE, ZEC, and BONK ended their three consecutive days of recovery with a sudden decline on Sunday, as crucial resistance levels capped the gains. Technically, the altcoins show downside risk, starting the week under pressure.
Global inflation watch: Signs of cooling services inflation
Realized inflation landed close to expectations in January, as negative base effects weighed on the annual rates. Remaining sticky inflation is largely explained by services, while tariff-driven goods inflation remains limited even in the US.
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