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The Nifty is at a significant Fibonacci support level – 4950. This number represents the 61.8% retracement of the up move from 4500 to 5630.
Now, I am not a big fan of Fibonacci retracements. Markets move on momentum. Why should a market stop falling when it comes to 61.8% of the previous up move? Prices fall when buyers do not buy. So, buyers will not step in to buy just because the price has fallen 61.8%.
But, Fibonacci retracements are followed by many traders. Elliot Wave users swear by it. So, we keep a watch when a significant level comes about. At 4950, then, the Nifty is at a stop or fall situation. If the Fibonacci support holds, then this is the low. If it does not, then we are probably looking at a free fall.
We will have to wait for market action to tell us if the support holds or is breaking down. So, it comes back to momentum, doesn’t it?
excerpts from book – Market Mind Games
Reality points to a very big gap between where the numbers leave off annd exceptional performance begins !
Logically , if you have a probability that you know will only apply for a limited period of time annd by definition that probability tells you that you have some signigicant chance of being wrong, even while it still applies, how much do you really know?
The truth is : PROBABILITIES TELL US SOMETHING – JUST not everything.
Market performance emerges form owning the need to always be improving our judgment
We can’t actually apply math or logic, let alone do other analyses, make judgments, or decisions, if we lack feeling annd emotion.
In fact, the only true thing we have to fear, at least when it comes to decision about uncertainty, is a complete lack of fear.
No matter how you analyze a market or a trade, noo matter what your timeframe, the only “thing” you are ever trying to deduce is if other market players will value the asset in question differently in the future.
Every single price at every single moment now and fowever will be only a perception nothing more and nothing less.
If the real question is , “What will other player’s perceive in the future?” then quantitative analyses make sense in their right context – as clues but not as answers.
From the Book – Market Mind Games’
Scope for judgement in Trading
From Trader Psyches:
Hopefully this doesn’t sound like an old broken record because it feels to me like I need to say it again.
Trading is not precise.
And this begets a whole number of downstream realities.
1. Your brain demands a judgment call in imprecision.
2. Your plan needs to leave room to make that best judgment call.
3. Improving your results comes from making better judgment calls.
4. Avoiding just your worst judgment calls (no “oh what the hec, oh I will just risk a little” trades) will make a big difference in your bottom line. The fallout is too great – lost capital, debited psych capital, revenge trades, wasted commission and lost time spent in mental recovery.
My Notes: Trader Psyches is a company offering psychological coaching to traders, based in the USA. Denise Shull, promoter of Trader Psyches has recently written a book on trading psychology – Market Mind Games. I am reading it.
The theme is: trading requires discretion. These decisions are judgement calls on current market behavior. This is similar to what I have practiced for some years: to have a view on the market every day, for day trades. I make a judgement call on likely market behavior, before the markets open. Most readers know this since I discuss the call on CNBC every morning, pre-market. This makes it easy for me to use mechanical methods to trade during the day, since I know which side of the market / with what anticipation, I am trading.