The Market is a Friend.

Quite often, we traders get frustrated at what the market is doing. We believe that somehow, the market has decided to destroy our trading career. Often, there is a lot of frustration at Market behavior, which leads to irritation and annoyance with ourselves as well as with trading.

But, truly speaking, the market is a friend. It gives us money, so it is a benevolent friend – on who showers benefits and gifts on us.

If the market is a friend, what is the reason for unusual market movements which often result in whipsaws?

The answer to this question is: What we perceive as unusual is in reality normal market behavior.  Markets are a collection of thousands of traders and investors, each with different views. Sometimes, the views re similar leading to trend. often, the views are different, leading to choppy markets. That is the nature of the market.

Then, we have to adapt ourselves to the market behavior. We can control our trading decisions, therefore we have the tools to adjust to what the market is doing.

Example:

I have been long in the Nifty. Yesterday (Friday, Aug 17), it appeared that the Nifty will finally make a strong up move. Then, the CAG report was presented in Parliament leading to a sharp sudden decline. I cannot blame the market for letting me down. It is for me to adjust to changing market conditions. After the initial reaction, the Nifty stabilized around 5375, when I reduced my positions and also shifted my deep in the money calls, to a little less deep.

My point is: we have to do what we believe is the correct response to changing market behavior. It is our responsibility.