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The market is
totally impassive. It is always right. It rolls along and no-one can
tell it what to do. If it doesn't go where your analysis and your
trading methods say it should, and you are losing money, it's no good
blaming the market, your broker, or even your trading method.
If you are a
"high powered" business executive who can manipulate and persuade
people, it won't work on the market. The market is impassive and takes
no notice.
If you take some
losses and get emotionally upset, and aim your fury at the market,
it won't work. The market will not respond to you. It's impassive
and takes no notice.
If you take some
losses and aim your emotional fury at your broker, it won't work.
He'll probably be impassive and take no notice either!
If you take some
big wins and in your elation imagine that you are now the Omnipotent
Master Trader, be careful because you are now emotionally very vulnerable.
Don't let your suddenly acquired wealth and your feeling of euphoria
cause you to get careless with your trading methods or your money
management. Don't, whatever you do, bet too large a proportion of
your account on the next trade!
On Page 6
of Gann's Stock Market Course, Gann Says ...
"You must learn to realize that you cannot make the market go your
way, you must go the market's way and must follow the trend. Many
successful businessmen who are accustomed to giving orders to others
and have them carried out will often, when they get into the market,
especially for the first time, expect the market to follow their orders
and move their way. They must learn that they cannot make the market
trend go their way. They must follow the market trend as indicated
by fixed rules and protect their capital and profits with STOP LOSS
orders."
This point concerning
"They must learn that they cannot make the market trend go their way"
actually happens far more often than most people realise. The classic
repeating example is the Australian government's reaction to the fall
in the Australian dollar currently in the news (10th June 1998). The
government don't want the dollar to fall too much more so they step
in and buy. This invariably results in a small rally and then the
dollar falls again. Government buying will not halt the established
downtrend. Every government of every country does this. The Swiss
did it when the Swiss franc was falling, the US government did it
when the US dollar was falling, the Hawk Government did it when the
Australian dollar was falling back then. And leaders in government
are "accustomed to giving orders to others and have them carried out",
but they can't turn an established downtrend by buying heavily because
the downtrend has not finished yet. As soon as they stop buying it
will resume. In fact, their buying sets up nice rallies on which to
sell short for short term trades.
A further example
is the Hong Kong government's reaction to the fall in the Hong Kong
share market, reported in the "Courier Mail" September 1st 1998 ..."A
savage 7% plunge in Hong Kong share prices rocked the Asian markets
yesterday ..... After spending the past two weeks pouring more than
$HK100 billion ($23 billion Australian dollars) into the share market
in an attempt to fight speculators and lift the Hang Seng off five
year lows, the Hong Kong government ended its intervention yesterday.
......... In turn, the Hang Seng plummeted 554 points to close at
7275........"
The speculators
they are "fighting" are the frightened investors selling shares. When
hundreds of thousands or even millions of people are all panicking
and losing money, no force on the planet is going to stop them from
bailing out!
What all these
points come down to is that ...
1. No matter what happens to you in the market, you must take
full responsibility for it yourself. You can't blame anybody else.
The buck stops with you.
2. Maintain
a calm, level-headed approach and treat trading as a business.
Gann says ...
"HUMAN ELEMENT THE GREATEST WEAKNESS"
When a trader makes a profit, he gives himself credit and feels that
his judgement is good and that he did it all himself. When he takes
losses, he takes a different attitude and seldom ever blames himself
or tries to find the cause with himself for the losses. He finds excuses;
reasons with himself that the unexpected happened, and that if he
had not lisened to someone elses advice, he would have made a profit.
He finds a lot of ifs, ands, and buts, which he imagines were no fault
of his. This is why he makes mistakes and losses a second time".
"The investor
and trader must work out his own salvation and blame himself and no
one else for his losses, for unless he does, he will never be able
to correct his weaknesses. After all, it is your own acts that cause
your losses because you did the buying and the selling. You must look
for the trouble within and correct it. Then you will make a success,
and not before."
Copyright © 2001
Terry Ashman
HotTrader, Australia
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