Trade what you see, not what you think or hope!
There’s no better time to post this educational article than right now. Despite constantly reminding myself to "trade what you see, not what you think or hope," two days ago I did the exact opposite. I ignored a clear double Pin Bar formation at a support level, which resulted in me taking a stop loss.
Ironically, I knew better.
But, as the saying goes, "Do as the preacher says, not as the preacher does."
Let’s dive deeper into this vital concept—how emotions and our tendency to predict or hope for the market’s next move can lead us astray, and why sticking to what the charts show is crucial for long-term trading success.
Trade What You See, Not What You Think or Hope
In trading, the temptation to predict the market’s movement based on gut feeling, emotions, or even hope is always present. Whether you’re new to trading or experienced, this temptation can lead you to stray from your strategy, often with disastrous results.
Successful traders have mastered the discipline of relying on objective data—what they see on the charts—and they minimize the influence of personal bias or emotional decision-making. In this section, we will cover why trading what you see is essential, the pitfalls of emotional trading, and strategies to remain focused.
1. The Pitfall of Predicting the Market
One of the biggest mistakes traders make is attempting to outsmart the market by predicting its next move based on feelings or speculation. It's a lot like gambling. For instance, after a loss, traders may try to "get back" at the market by forcing trades or doubling down, just as a gambler would after a bad hand. This reactive behavior is the opposite of trading based on logic and a structured plan.
In fact, reacting emotionally after a loss or even after a win (due to overconfidence) creates patterns of erratic trading. Instead, traders should stick to price action setups and predefined trading strategies.
2. Objectivity Over Emotion
Trading involves acknowledging that the market doesn’t care about your emotional state. It’s not personal. And yet, so many traders get emotionally attached to their trades, thinking they can make the market to move in their favor. Instead, your goal should be to detach emotionally from individual trades and focus on the larger picture: is the setup you are seeing aligned with your strategy?
No matter how perfect a setup looks, you should never become overly confident or emotionally invested in a trade. Always maintain your risk management, even if you are sure this trade is a “winner.”
3. Emotions Can Be Deceptive
Your mind can play tricks on you, especially when you're hoping for a specific outcome. Often, traders get caught up in their ideas of where they "want" the price to go, or what they "think" the market "should" do. This can cloud judgment and lead to chasing trades, forcing setups where none exist.
Price action on the chart is objective. It doesn’t care about your opinions. By focusing on clean price action patterns and setups, you will avoid being misled by your own expectations.
4. Stick to Your Trading Plan
One of the most effective ways to ensure you're trading based on what you see is to stick to your trading plan. Every trade should be in line with the rules you’ve set in advance, whether that’s for entering, exiting, or managing risk. Deviating from your plan because of a gut feeling can quickly turn a good strategy into a string of bad decisions.
Ask yourself:
Is there a clear setup here, or am I just trying to make one up?
Does this trade align with my strategy and risk management rules?
5. Trust What the Charts Show You
The key takeaway is that no matter how tempting it is to speculate or act on emotions, the price action is your guide. Trust what the charts show you, even if it contradicts what you “feel” should happen. For instance, ignoring a perfect Pin Bar setup because you “hope” for a retracement can result in missed opportunities or losses.
Ultimately, price action trading boils down to looking at what the chart is telling you and not what you want it to say.
Have a nice weekend!
Mihai Iacob
Ironically, I knew better.
But, as the saying goes, "Do as the preacher says, not as the preacher does."
Let’s dive deeper into this vital concept—how emotions and our tendency to predict or hope for the market’s next move can lead us astray, and why sticking to what the charts show is crucial for long-term trading success.
Trade What You See, Not What You Think or Hope
In trading, the temptation to predict the market’s movement based on gut feeling, emotions, or even hope is always present. Whether you’re new to trading or experienced, this temptation can lead you to stray from your strategy, often with disastrous results.
Successful traders have mastered the discipline of relying on objective data—what they see on the charts—and they minimize the influence of personal bias or emotional decision-making. In this section, we will cover why trading what you see is essential, the pitfalls of emotional trading, and strategies to remain focused.
1. The Pitfall of Predicting the Market
One of the biggest mistakes traders make is attempting to outsmart the market by predicting its next move based on feelings or speculation. It's a lot like gambling. For instance, after a loss, traders may try to "get back" at the market by forcing trades or doubling down, just as a gambler would after a bad hand. This reactive behavior is the opposite of trading based on logic and a structured plan.
In fact, reacting emotionally after a loss or even after a win (due to overconfidence) creates patterns of erratic trading. Instead, traders should stick to price action setups and predefined trading strategies.
2. Objectivity Over Emotion
Trading involves acknowledging that the market doesn’t care about your emotional state. It’s not personal. And yet, so many traders get emotionally attached to their trades, thinking they can make the market to move in their favor. Instead, your goal should be to detach emotionally from individual trades and focus on the larger picture: is the setup you are seeing aligned with your strategy?
No matter how perfect a setup looks, you should never become overly confident or emotionally invested in a trade. Always maintain your risk management, even if you are sure this trade is a “winner.”
3. Emotions Can Be Deceptive
Your mind can play tricks on you, especially when you're hoping for a specific outcome. Often, traders get caught up in their ideas of where they "want" the price to go, or what they "think" the market "should" do. This can cloud judgment and lead to chasing trades, forcing setups where none exist.
Price action on the chart is objective. It doesn’t care about your opinions. By focusing on clean price action patterns and setups, you will avoid being misled by your own expectations.
4. Stick to Your Trading Plan
One of the most effective ways to ensure you're trading based on what you see is to stick to your trading plan. Every trade should be in line with the rules you’ve set in advance, whether that’s for entering, exiting, or managing risk. Deviating from your plan because of a gut feeling can quickly turn a good strategy into a string of bad decisions.
Ask yourself:
Is there a clear setup here, or am I just trying to make one up?
Does this trade align with my strategy and risk management rules?
5. Trust What the Charts Show You
The key takeaway is that no matter how tempting it is to speculate or act on emotions, the price action is your guide. Trust what the charts show you, even if it contradicts what you “feel” should happen. For instance, ignoring a perfect Pin Bar setup because you “hope” for a retracement can result in missed opportunities or losses.
Ultimately, price action trading boils down to looking at what the chart is telling you and not what you want it to say.
Have a nice weekend!
Mihai Iacob
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t.me/intradaytradingsignals
💎 Crypto Channel:
t.me/FanCryptocurrency
🌟 Bust your trading with 50% deposit bonus:
secure.m4markets.com/links/go/5426
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