I will consider possible mistakes based on the assumption that there are no patterns in the market. Those who believe the market is patterned can skip this post.

For those who remain, let me first point out the main difficulty you need to understand and truly grasp. Despite there being no patterns in the market, you still need rules.

You may ask why. What rules can there be if there are no patterns? Perhaps the simplest example in this case is the blacklist in a casino. Card counters are not allowed in casinos, even though the cards fall randomly. The counter calculates the bad options for themselves and waits for good ones. The same goes for trading. Considering that the market moves as it pleases, it will occasionally move in the way you expect. In this case, everything will depend on the quality of your rules, or in other words, your understanding of the processes occurring in the market.

Why is wave theory so resilient? Because in historical data, we can easily show how it works. We cannot currently recognize the start and end of a movement, but in hindsight, it’s easy. Why? You have formulated the signs of how it should be but lack a clear formulation of how it should not be. You cannot formulate the negation and fall into a trap. Assume that the rules may not be followed for some time and will be followed for some other time. Then you can see in the market when the price starts moving contrary to your expectations.

What happens is you create rules and see that they precisely describe the price behavior. Bingo!!! The longer they work, the worse it is for you. You become convinced of your infallibility. But over time, the system fails. You’re lucky if this happens quickly enough. Then, out of caution, you quickly change tactics. But if you manage to believe in your exclusivity or, even worse, endure a bad situation while adhering to the rules, you will believe that willpower is paramount and next time continue to endure based on past experience. And here, it’s up to chance. If you leave the market before it beats you, you are lucky; if you stay, the market will outplay you.

What to do? As I said above, first of all, clearly describe the situation when the rules do not work. Be sure to include a rule to work against the rules. This way, you can test the resilience of your system. It’s important to understand that any standard or non-standard actions can only be performed based on previous profits. If there are no profits, wait for the moment when the rules stop working and then for when the market returns to the scheme you described. In this case, you will skip a series of losses that occur when the market moves against your expectations.

This is a truly long process. It requires both a good understanding of the market and good discipline. Otherwise, you are doomed. I would be glad to be proven wrong.

Respectfully…