CONTRARIAN

My friends say I trade like a psychopath. Maybe they’re right.

To me, market psychology is the most fascinating thing about trading.

It’s been that way for a long time.

It is widely perceived that emotions drive around 80 percent of the decisions that we make, while logic and reasoning take the back seat — accounting for the other 20 percent. For the most part, psychologists everywhere agree on this truth. Yet…

Far too many people have yet to come to terms with it.

Emotions.

Humans are irrational creatures.

I don’t think there is anything inherently wrong with being emotional. But, I do know that when shit hits the fan, logic is usually the first thing to fly out of the window.

Emotions dictate the investment thesis’ of the vast majority of traders. With that being said, coming to terms with the fact that the market is (mostly) driven by emotion is not only a reasonable conclusion we must accept; it is a harsh reality.

Someone out there is taking advantage of your emotions and actively weaponizing it against you. They’re buying with size, when clouds of fear impact your judgement — and selling when you’re too euphoric to even notice the trouble brewing in paradise.

We fall for it. Every single time.

Risk.

Social media is a double edged sword.

It grants us access to limitless information at light speed, but also amplifies the dangers of hive-minds and echo chambers. The wealthiest people on the planet understand the sheer power of these echo chambers and utilize them often to manipulate the market.

This is simply the the game we play.

Charts tell stories.

Charts have told us that time and time again that risk isn’t always a bad thing. Calculated risk is a tool to be used sparingly. Don’t listen to people that tell you “risk is bad.”. It’s a popular over-generalization.

Understanding market psychology is only 10 percent of the battle. Even learning how to tame your emotion is not enough.

You must become cordial with risk. Because without risk, there is no reward.

At first, you want to become close friends with risk; understand the ins and outs of his polarizing character… Then keep him at a distance.

The Game.

We tend to subconsciously copy one another… Especially people we trust.

We value freedom of choice. But we value acceptance even more. That’s why “contrarianism” is completely out of the question for most people.

But the real question is: Do you honestly agree with everything people say?

When there’s blood on the streets and market sentiment is in the gutter, I like to look for opportunities most people overlook in fight-or-flight situations. It is scary, but it’s also when I make my most profitable trades.

Don’t disregard your emotions; challenge them.

So, the next time you see a self-proclaimed guru telling you to “buy this” or “sell that”, simply ask “why?”

Question it all. — Lite.