Markets Tend to Part the Foolish from Their Money

Sometimes you feel that you are able to throw caution to the wind. That is when you must be careful to not spit into it.

One satisfying aspect of trading can be identifying a market (or spread) that is undervalued, at support, trending, breaking out, or behaving seasonally – and then seeing it continue to behave as expected. When it does so, it pays to be aggressive – boldly assuming positions, and even reentering on corrections using the TTE once you have salted away some profits. As long as the market continues to move favorably, you will make money. Therefore, the rewards can be emotional as well as financial.

But it is this kind of market that you must respect even more. Why? Because a good trade, and an especially successful “campaign,” can make you feel invincible.

Markets can be generous, but more often than not, they tend to part the foolish from their money. Furthermore, you don’t easily or often identify a really good trade – and have the market behave as expected. Especially after a successful trade, it is too easy to “take a shot” at a marginal trade. When you do that, you may be spitting into the wind.