Market Sense

When a methodology or system you are using to trade sends out a signal that there is an opportunity present, sometimes you need to have enough “market sense” and discipline to ignore it. The system itself can only be used as a guide, if you purely trade the system it will eventually fail. For example,  a system that relies on a moving average has to have inputted parameters. Those parameters do not change with the market. Markets are an ever changing entity. There is constantly an increase and decrease in volume/activity, and parameters are not built to adjust to such changing conditions, and therefore you need a countermeasure to make sure your method stays robust. That is where logic and market principals come into play. Trading is multi-dimensional, most traders fail to see this. Ask an average trader why their system works, and he wont be able to tell you, he doesn’t understand the logic behind his method, and is in turn doomed to failure.

David Hurka
Forex Vanguard
www.forexvanguard.com

~ by Falcor on May 16, 2009.