In the CIA book titled "Psychology of Intelligence Analysis", as mentioned in a previous posts, the author writes
"The disadvantage of a mind-set is that it can color and control our
perception to the extent that an experienced specialist may be among
the last to see what is really happening when events take a new and unexpected
turn. When faced with a major paradigm shift, analysts who
know the most about a subject have the most to unlearn.".
Even though I know that the market has two to five day short term cycles, I still have a tendency to think that when the market is trending down or up that it will continue in that direction, even though I know that the market is due for a reversal. It is always a struggle to remind myself that the market has a high probability of trending up following several days of making lower lows, and vice-versa for markets that have made higher highs for several days.
I also know, but have a hard time believing, that the biggest profit opportunities is when the market does the unexpected. It is something that I must remind myself of constantly.
Charles
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