Monday, November 15, 2010

Why Price Move?

I watched Mark Douglas 'Mind over Market'. He told us that as trader, our trade depends on other people who want bid/ask price worse than ours. That made our profit. It's very true. But those statements may lead to wrong opinion about price. People who watched it will think they must enter first before others so they get better price.

What people not think is like this:
Not price movement come from other people who entered the market. It may come from people get out from market. Whether it Profit Taking or Cut Losses or Margin Call. In Fact, the most higher probability trade come from here. They were forced to move the market, like being Stopped Out. Why Price going higher and higher and seemed illogical to buy there but there're still price move higher even on the peak price? That's Cut Loss or Stop Loss in Play!!!

Sometimes it's okay to entering late or at the worse price because trading with the trend will force the opposite direction to get out, and that's also movement fuel. Oh and by the way, pro-trader sometimes long on overbought not thinking it's still cheap, but they know the price can still go up.

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