Most newbie traders will hold onto positions against the trend because “It’s going to come back” or “The market is being manipulated.”

Why are you so arrogant? Do you really think you can control the market with your mind? If you close your eyes and click your heels and say over and over again, “It’s going to come back. It’s going to come back,” do you really think the market is going to magically come back?

Wake up. This is the dog eat dog stock market, not The Wizard of Oz.

You’re not Dorothy.

Don’t try and impose your will on the stock market but rather listen to what the stock market is telling you. Every stock has its own secret to tell. The only question is will you listen carefully enough to hear it.

The most important thing you need to listen to, what any given stock on any given day is screaming out, is the volume.

Volume tells you which psychological group has control, bulls or bears. If the market has been trading within a narrow range and then breaks above that range on high volume, it means that the bulls have control of the short term trend.

When you see volume expanding on a directional price move it means that the market is out of balance. It will continue to move in its direction until it can attract sufficient buying or selling interest to create a new balance.

The arrogant trader often misses breakout moves.

When ever I ask a fellow trader why he missed the increasing volume on the breakout I usually get the response, “I don’t know”. The trader was so busy looking at the price and so busy focusing on the thoughts going on inside his own head that he failed to listen to what the market was screaming at him through the volume metric.

This is what separates the good traders from the bad. When a big move happens in the market, good traders listen to what the market is telling them and the meaning of what they hear. Bad traders focus inwardly, on themselves, and on their own greed or frustration at missing the event, how can they make the money back they lost, etc.