FEAR: The Driving Force of the Market

Staying completely detached from the emotions of news, price action and the events surrounding us from day to day is extremely challenging.

At YachtMoney we use this as a gauge for where they want the price action to go, and when I say “they” (I *AM* referring to the shadows, the market makers, the market gods, whatever you want to call them).

I hear a lot of people saying “it’s rigged”, “the market is against you”, “you will never beat the system”.

Ready for your head to explode?

We aren’t trying to beat the system, we are trying to understand and co-create with the system.

The only way to win at any game is to learn the rules and figure out how you can apply your skills to the given environment.

That’s it.

This ideology can pretty much be applied to anything in life. Starting a business, climbing the corporate ladder, or fighting a war.

Fear takes a lot of energy to generate, if we look at a chart we notice that the ratio between bull trends and bear trends is over 10 to 1. It takes an immense amount of energy to create enough fear for an aggressive pullback.

Maybe the fear is organic, maybe it’s completely fabricated (I’m leaning more towards the fabricated side), but I’m also an extreme-optimist and believe that the natural state of all things in the Universe is to grow and expand.

I’ve spent many an hour fighting trends, being jaded, and having complete contempt for the markets. I feel every good trader has to go through this step as part of their evolutionary journey to trading greatness (a status I have yet to reach).

The only thing I really learned was that it was very expensive to be stubborn and have a strongly biased opinion. As the old adage says:

“The market can stay irrational a lot longer than you can stay solvent.”

Here I am, I’ve made up with the market, I’ve reconnected with the idea of ever expanding abundance and all is well.

I’ve learned that my role and relationship is that of an interpreter. I have a natural knack for spotting reversals and swings, and if I give myself enough breathing room I can be quite profitable in the process.

I don’t pay attention to the news (at least the intra-day news). I will keep an eye open for longer running “doom and gloom” pieces (you can almost feel when the Muppets activate the fear machine).

Much like the tides of the ocean. Price action goes up, price action goes down. Going against the grain is the hardest thing to do when emotions are running high (both euphoria and fear), but it is often the most profitable.

If you are feeling complacent or feeling like “investing in the stock market is easy”, it’s probably a good indicator to start picking up some longer term short positions to hedge your portfolio. We are hovering around that period as we speak, there may be a distribution period going into September/October, and then we may see a decent pullback before a continuation higher.

We are playing on a playground that is built purely around the manipulation of emotions and perception. This is why it is vital to remain detached and un-emotional at all times during the process.

Want to remove the emotion from your trading?

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