"Trade what you see, not what you think" is a powerful mantra in the world of trading and investing. It emphasizes the importance of relying on objective data and technical analysis rather than subjective opinions, emotions, or market biases. Here’s how you can apply this principle:
1. Focus on Price Action
Price is the ultimate truth in trading. Make your decisions based on what the charts show rather than speculating on what the market "should" do.
Use tools like candlestick patterns, trend lines, support and resistance levels, and volume analysis.
2. Follow Your Trading Plan
Develop a trading plan based on clear entry and exit signals. Stick to it rigorously.
Avoid deviating from the plan due to fear, greed, or overconfidence.
3. Embrace Technical Analysis
Learn to read and trust indicators like moving averages, RSI, MACD, and Fibonacci retracements.
These tools can provide actionable insights that align with market movements.
4. Detach from Predictions
Avoid making trades based solely on news or forecasts without confirming with chart analysis.
Remember that markets are often irrational and can behave unpredictably in the short term.
5. Control Emotions
Emotional trading leads to chasing the market, revenge trading, or holding onto losses for too long.
Practice mindfulness and maintain discipline.
6. Learn from Experience
Keep a trading journal to record what you saw versus what you thought during trades.
This helps identify patterns in your decision-making process and improves objectivity.
By adopting a mindset of trading based on observable reality rather than assumptions or biases, you'll improve your ability to navigate the markets with clarity and confidence.
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