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Back in my prop shop days,

there were a whole heap of

seemingly over-used cliches.

Today, the market reminded me of one.

"The market is always right“

I'd hear someone call (usually after a loss and vocally cursing my luck).

"Great. Someone rubbing it in is

just what I need after that hit!"

With a considerably greater level of

trading experience, these days I'm

able to appreciate the real meaning

of this trading truth and react better to

what happens next.

Today we had the ECB rate

decision and press

conference with Mr. Draghi.

I'd learnt a long time ago that

with news it's more important

to see what the market does

than whether the news is

bullish or bearish in itself.

Draghi definitely seems to be pretty

dovish on rates and accommodation

levels (at least to me) - which in

theory, is supportive to the economic

recovery.

Initial Jobless Claims comes in

better than expected.

I was trading the FESX with one

eye on what the ES was doing.

The markets looked like they

wanted to try to test higher but

they just couldn't manage it.

Generally, the way a price

discovery-based auction works is

that a market tests one way and

when it finds enough opposing

activity, it reverses and tests in

the other direction.

In this case, the fact that the

markets seemed to want to push

higher but couldn't and that there

were likely to be longs getting

trapped, my opinion (and trading)

switched to a short-bias.

Another test higher in the ES without

making new highs for the day,

followed by a quick break back

down, only strengthened my view

that the bulls were in trouble. So I

hammered away at the FESX bid.

"Why the $%!& can't this

hunk of junk just sell off!!!"

I'm thinking whilst trying to

remain calm.

The ES was pushing lower and

obviously was about to dump, so

what on earth was going on with

the Stoxx?

This is where I backed off.

The very fact that I was

beginning to get agitated with

the lack of a gargantuan sell-

off in favor of my shorts, told

me that my judgment may

have been compromised.

"There's still NFP's tomorrow and if this

sell-off does continue, I'll jump back in

when the market shows its hand“

There's no sense in fighting the market

the market does what it does and is

always ̀ right'.

The FESX did eventually break after

another 30mins or something and really it

didn't trade back higher much at all

before it broke lower, hanging on to my

shorts made no sense whilst I was

becoming annoyed with the market.

Not only could I not be certain that I

hadn't missed something, but I also

have learnt to the detriment of my

account balance over the years, that

days where there's a decent amount

of movement can make or break

your month.

Hanging on will sometimes net

you some great winners, but

often you'll get punished with a

string of capital sapping losers as

you fight in vain to pull your day

back.

Knowing when to hang on is the

key - and it's when emotions

creep in that logic, objectivity and

judgment go out the window,

making it far more difficult to

figure this out.

Not only by understanding, but also

by respecting the fact that whatever

the market is doing at any given

moment is right no matter what it

looks like it should do, you can

protect yourself from getting dragged

into irrational trading.

Trading by the simple phrase

"the market is always right"

gives you the chance to emotionally

detach yourself from your losses (or

positions that aren't getting to their

targets) and take a step back.

On days where it really

matters, even if the market

does eventually ̀ see sense',

there's always likely to be

another opportunity to get

into a great trade.

When the market doesn't and

if you've already

decided it's wrong,

prepare to be dealt a financial

and emotional beating.

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