Since the day I started trading, something that I’ve always struggled with is Market Sentiment. When I try to use common sense to pick stocks, I almost always lose. I’ve been trying to somehow remember all of the times I’ve been wrong to help piece together the logic behind my misfortunes.
When you trade the news, Market Sentiment plays a huge role.
My basis instincts are generally wrong when I try to guess a stocks direction based on news or hype. I’m wrong so much that I’ve done nothing but blow up account after account. Piecing together why I’m wrong so often isn’t an easy task. The market shows me something different everyday. Things that I learned yesterday, I probably wont see again for another month or year.
Before I start trading again with real money, I need to get a handle on market sentiment. I’ve seen stocks do some wild shit based on how people perceive the news in that very moment in time. When I hear traders say that news isn’t important to them, I just wonder how many plays they’re missing out on.
I am someone who likes to trade early morning news stories and upcoming events. I think that traders who are trading the chart, company fundamentals and current news have a better chance of getting it right over someone who is simply looking at the chart alone.
I’m still trying to wrap my head around why certain news stories have a positive or negative effect once market sentiment is added in.
I was fortunate enough to notice the following video appear in my Twitter feed today. It goes over true and false statements, and how market sentiment plays into the big picture. This is exactly what I needed to see at this stage in my trading career.
I’ve been following Timothy Parker since I started trading. This is the first time I’ve seen him post a video.
The graphic below was created to hang on my wall.
What do you think of all this? Please leave your comments below.