"Trade what you see, not what you feel"
This is a fundamental principle in trading that emphasizes the importance of making decisions based on objective market analysis rather than subjective emotions or biases. Here's a comprehensive explanation: What you see:
- Refers to the objective analysis of market data, charts, and indicators.
- Involves identifying trends, patterns, and signals based on factual information.
- Requires a trader to focus on the present moment and current market conditions. What you feel: Refers to subjective emotions, biases, and personal opinions. Includes feelings of fear, greed, hope, or anxiety that can influence trading decisions. Can lead to impulsive and irrational decisions that deviate from a well-thought-out trading plan. Why trade what you see? Objective analysis helps traders make informed decisions, reducing the impact of emotions. Market data and charts provide a factual representation of market conditions, allowing traders to respond accordingly. Trading based on what you see helps develop discipline and consistency in decision-making. Why not trade what you feel? Emotions can lead to impulsive decisions, resulting in poor risk management and potential losses. Biases and personal opinions can cloud judgment, causing traders to misinterpret market signals. Emotional trading can lead to overtrading, hesitance, or indecision, ultimately harming performance.
