Below are four two-minute videos describing what I see as the foundational concepts of trading. These are:
- It’s a necessity of markets to repeatedly wash traders out of their positions, putting them back on the sidelines to maintain a constant supply of fuel to perpetuate continual printing of price. Therefore, being frequently rinsed out of positions leading to a coin flip win/loss ratio is not a representation of poor trading.
- Like any auction, buyers and sellers will continually test and retest prices in search of price agreement. There are going to be periods in which buyers and sellers are matching each other out (sideways action) and times when buyers or sellers are the dominant force creating a direction skew (trend) where price simply moves in the path of least resistance.
- Even when a market is trending, there are frequent changes in the rate at which fuel is used and replenished, hence why price doesn't move in a straight line.
- Traders don’t volunteer to be washed out of positions; instead markets repeatedly trap traders who once caught on the wrong side of a directional skew, exit the market helping to propel prices in the direction against them/the path of least resistance.
Concept 1: Why Markets Repeatedly Flush Out Traders from thetradingpractice on Vimeo.