THE TWO MOST IMPORTANT CONCEPTS IN TRADING

THE TWO MOST IMPORTANT CONCEPTS IN TRADING 

1) there is a mathematical basis for everything, 

2)  and that at any moment when you are convinced of themarket’s direction, there is someone equally smart who believes the opposite.

 
Never be convinced of anything, and always be open to the possibility that the market will do the exact opposite of what you believe. Although the market at times is imbalanced and moves strongly up or down for many bars,

most of the time it is relatively balanced, even though it might not appear to be so to a beginner. Every tick is a trade, which means that there was someone who thought that the price was a good value to sell, and someone else who thought it was a good value to buy. Since the

market is controlled by institutions and they are smart, both of these traders are smart and were acting rationally, and both have strategies that they have tested and shown to be profitable. One of the most important skills that a trader can develop is the ability to understand whether a trend bar is the beginning or end of a move. If you see a strong bull trend bar only as bullish and a strong bear​trend bar only as bearish, you are missing

what half of the big players are doing. Around the high of every bull trend bar, there are bulls buying the strength. There are also other bulls who are looking for a pullback and will buy near the low of the bar if the market gets there. However, it is important to realize that there are other bulls who expect the strength to fail and they are using the strength as an opportunity to sell out of their longs and take profits. There are also bears who see the bull trend bar, no matter how strong, as a climactic, failed effort by the bulls, and are shorting around the high of the bar. Somewere sitting on the sidelines, waiting for a strong bull trend bar, so that they could short at what they consider to be an overdone rally. Other bears will short below the low of the bar, since they will see this as a sign of weakness that could lead to a tradable reversal. Similarly, there are profit-taking bears and new bulls buying at the bottom of every bear trend bar, no matter how strong the bar appears to be, and there are other bears who are looking to short near its high, and bulls looking to buy above its high.