Well the above picture don’t have much difference except that it’s flipped and numbered with (1) and (2), they are the exact same photo.
What we want to talk about here is decision making. Assuming you are purchasing the above cars(no difference in specs, colours or whatsoever) – (1) valued at $150k and (2) discounted at $100K, which will you choose? We believe that you will choose (2) because of it’s lower value. Quite obvious isn’t it?
It is gonna be the same if we are shopping for bags, phones and clothes, we will always get it at better price, not all of us but most of us. The risk for “waiting” is that you may not get it as it may run out of stock/size. If that happens what do we do? Move on and look for something new or better right?
So why is it that in trading, most of us NEVER keep to that practise? Why are we always chasing for a price that is increasing or decreasing(for short) in value? Why are we always rushing to get in the trade? Won’t there be a time that market corrects and let you take your trade at a better price? Do remember that the market is always there, if we miss it, it’s alright move on to the next counter which may always give some other opportunity maybe better.
See above on a trade that could give us good discounts for better rewards(Considering trend is in our favour). “Red X” is the point where we will usually buy in because it tested the “Blue Line” – support or resistance level.
The support and resistance acts like discounted/reasonable price to the product you are buying, if the value goes below that, it usually means that there are newer products in the market and may not bring much demand in the near future. So we only want it at a good price, and picking it up near the support or resistance is the safest zone for that.
As trader, we have to make sensible decision making. If you want to make trading your life, you have to do things that you do in your life. Treat it the same and hopefully you will have a smoother trading journey. Don’t make trading complicated it’s simple common sense.