The Hindsight Trap (Part 2 of the Money Trap)

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The Hindsight Trap (Part 2 of the Money Trap)

by Guest Columnist, Kenneth Reid, Ph.D

Greetings Hawkeye traders. This week I’d like to discuss a common trader issue that’s rather difficult to spot. I call it The Hindsight Trap.

Looking back on a cold chart, it’s natural to think that we could’ve, would’ve or should’ve known what was going to happen at those key inflection points. Indeed, hindsight reinforces a common trader belief that the market is predictable…at least by us. But this is a trap.

However, this assumption violates one of Mark Douglas’ key coaching principles: Anything can happen.

And if we didn’t catch that amazing move, hindsight also tends to foster regret and a subsequent imperative to not miss out. But when we adopt that particular imperative, which is half fear and half greed, traders become over anticipatory. We jump the gun and we become highly goal oriented.

And here’s the rub… the more important an outcome becomes, the more likely we will adopt the attitude that the end justifies the means. And once we switch over to that mode of operation, we tend to abandon discipline. Instead, we start to improvise. This is the hindsight trap.

To make matters worse, I believe there is a gender factor in this switching process: it happens so easily and quickly for men that we barely notice it… but less so for women. (Is this a testosterone issue? Probably. Men tend to be highly goal-oriented.)

True story: I was recently able to coach a woman to become a profitable futures trader in just three months, whereas men typically take quite a bit longer. The speedy progress was due to the student, not the coach.

Shelly was willing and able to follow very simple rules even when she was wrong, even when she lost, and even when she missed out. And she was willing to humbly accept that she couldn’t know what was going to happen next, so early on she just stopped guessing.

Bottom-line, she didn’t outsmart herself.

For Shelly, the inevitable obstacles and delays she faced in achieving her end-goal did not justify a change in means. She trusted her rules and focused on maintaining discipline, rather than being overly concerned about the result of her last trade.

If you want to reinforce a process-oriented Mindset in your trading, I have prepared a free video for you to download and listen to. The video has a special soundtrack, so for the best result, use stereo headphones. (And this week you don’t have to opt-in to download.) Enjoy!



Join Randy in the next free LIVE Hawkeye Demonstration Room held every Wednesday at 9.30am EST US. You will learn more about volume and volume price analysis and see more examples and live trade setups. It is open to all.

Click this link for more information or to join us in class.

Learn to trade the Hawkeye way.

Good trading,

Randy Lindsey
Hawkeye Traders, LLC

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