Every investor must approach the market not as a fan, who in time of boom, believes that the market will soar forever, but as a judge who is open to every market move, who does not pick sides, who make decisions based on reality not desire.
If an amateur investor is bullish we all know that he pray and hopes that the market remains bullish forever. This prayer and hope will blind this trader from the possibility of a downward move. Don’t be a fan of your positions. Always question your decisions, re-analyze your trades, adjust your risk. Accept the fact that you can be wrong. Understand that it’s impossible to know what the market will do next. Be prepared. “We can’t predict the market, but we can always be prepared”.
No-matter how beautiful or healthy a trend is, don’t befriend it, be ready and open to the possibilities of a an opposing move. In Economics we all know that booms are followed by crashes, history is our witness. Don’t fool yourself in believing that good times will last forever. Be prepared.
