Last updated on July 3rd, 2020
Every trader during their evolution has thought that the market was out to get them.
It is usually when your stop loss is taken out right to the tick and then the market continues in the direction you intended.
If it happens on occasion, many of us can deal with it. If it occurs over and over again in a short span of time, it is clear why some would be paranoid.
The market is out to get them.
This can make a trader “stop adverse” and will either ignore the stop placement or move it when price approaches. The fear of being the last order taken out before the reversal can be strong.
This is where it becomes a trader “knowing” the market will turn because that is what usually happens – to them.
You’re Not That Special
Is the market you’re trading only going to reverse once you’ve hit out for a loss anyway – if it is indeed really against you?
Isn’t this all by design anyway?
Most will tell you that it is ludicrous to think you, you personally, are a target. But a trader who feels something fishy is actually going on will reason it two ways:
- Start to become extremely paranoid each time the market takes them out by just a tick or two
- Tell themselves that it’s not sensible to think this way.
But then they might hear talk of a massive trader who “controls” a market and looks to manipulate small traders to make a profit.
Perhaps a secret algorithm which searches out stops in order to secure advantageous prices.
Perhaps there’s even some mythical agency at work which steps in now and again in order to moderate price moves.
But even if these entities do exist, can the market really be against you as an individual trader? Can the market really be out to get you?
Nobody Knows You
Markets on the whole have moved away from open-outcry and are traded electronically these days; so the there’s no knowing for certain, exactly who is trading and where they are doing their business.
This goes for a bank trader or a retail internet-based trader.
However, there are certain habits which groups of traders might repeatedly exhibit. Because of this there may be other groups of traders looking to use this information to their advantage.
They might try to run stops on the high of the day for example, knowing that smaller traders are more easily shaken out in general. But there’s always the chance that with new highs more buyers will be found.
They don’t know whether you are in a short trade at the time or not and they don’t know whether the market will reverse once stops have been hit. There might be a good chance it will do these things and this is why certain traders might try this tactic.
Traders are told that if support breaks, the long trade is not going to work out so take your loss. This is incorrect and I wrote an article on trapped traders (failure tests) that will expand on that.
Losing Trades Happen – You Place The Meaning On Them
Because there are many different types of market conditions, whether or not you feel there’s some greater force at work out to sabotage your trading and extract money from your account to deposit in its own (which is the name of the game), there will always be times to a greater or lesser extent, when a particular strategy you are using takes a series of ‘unfortunate’ and unavoidable losing trades.
The trouble is that as humans we are very contextual and social beings, who try to attach meaning to anything which might exhibit or seem to exhibit some kind of pattern.
A hard-to-take series of ‘unfortunate’ losers can evoke those primal emotions within us which seek patterns in order to help us understand the world around us better; in order to help us survive.
The trouble is that in this case, sometimes it is just bad luck that you end up with a few to-the-tick stop outs or a market that moves against your position contrary to all sense and reason (at least sense and reason which you are currently aware of).
Sometimes it’s just inevitable that your strategy won’t perform effectively over a few trades and due to market conditions, you get thoroughly done over.
It’s About Filling Orders In The Market
Ultimately the market is always out to get someone.
By “get” I mean fill orders within an auction context.
The market will push one way until there are no more buyers and then it will auction back in the opposite direction until there are no more sellers. Sometimes you will be the one which the market ‘gets’, but don’t worry because it’s indiscriminate in who it goes for!
What is of paramount importance is to stick to your trade plan while you are trading. If you test and find that you get taken out of a trade just before a reversal in certain conditions, adjust your trade plan accordingly.
The way in which a market trades is not always going to be optimal for all systems, all of the time and sometimes, we all feel a little like the market is out to get us.