Trading Habits: 39 of the World\'s Most Powerful Stock Market Rules pdfdrive com

14. Successful trading is about consistently doing the difficult thing so often
that it becomes second nature. – Richard Weissman
The easy trade is usually the losing trade. When a trader feels the most
comfortable entering a trade to get onboard a trend, it is usually close to the end.
It’s difficult to take entry signals with great risk/reward ratios because of deep
dips in price. This is typically due to fear in the market.
The best dip buying opportunities happen at key support levels due to extreme
fear of an event, which triggers a plunge in prices. The vast majority of the time,
the feared event doesn’t happen and a large rally occurs when the end of the
world is avoided.
Traders and investors often say they want to buy a key support level or big
pullback, and even have a specific price target, but often times the pullback and
dip occurs due to market fears. The potential dip buyer gets so consumed by fear
that they can’t take their desired entry signal because their emotions take over.
Maximum buying opportunities happen at the height of these false fears that
have little basis in reality of the future price. Of course, fear is not a signal in
itself. Fear is what creates trading signals as price reaches extreme oversold
levels, key long term moving averages, and old price support zones.
Another difficult entry to take is to buy a breakout to new highs out of a price
range. The initial breakout over resistance will feel like you’re buying too high,
chasing, or buying late. A trend up to new all-time highs can only happen after a
breakout to a new price level. Momentum traders and trend followers’ best trades
are usually those that are entered at an initial breakout into a new price zone, and
then trend over weeks and months to higher highs or lower lows for days, weeks,
or months.
The two most profitable ways to trade are to buy extreme lows that are caused
by unfounded fears, or to buy breakouts or momentum at the beginning of a
large trend, riding it to big profits. Both are difficult to do because a trader must
overcome their own fear.
All the things that make a trader profitable are difficult to do. Buy initial
strength, short initial weakness, buy breakouts, sell breakdowns short, and let a
winner run with a trailing stop loss, cut a loser short and accept when you’re

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wrong.
Financial markets can be counter intuitive because when things appear to be the
most obvious, that is typically when the opportunity has passed. Opportunity
exists in a state of uncertainty, when the majority is waiting to see what will
happen, and where price will go next. Price will generally go in the direction that
causes the most financial and emotional pain to the majority, because the
majority is usually wrong over the long term.

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