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Market Perception - Three Blind MiceThree Blind Men And The MarketsA Hindu folktale tells of three blind men encountering an elephant."It's a tree," says one, stroking a leg. "No, no, it's a snake," says another, feeling the trunk. "No, this must be a house," insists a third, spreading his arms against the bulk of the elephant's body. All three had a different perception of the elephant based on the part they examined and all three conclusions were wrong. The elephant was larger and much more complex than any of the men realized. A Market TaleA similar tale is told everyday in the market. Each market participant has different needs, agendas, histories and perceptions and sees the market differently.As with the three blind men examining the elephant: The Bear sees a market drop as a great vindication of his view and recovery of his position. The Bull sees the action as a short pullback to add to or enter a long position. The Day Trader views a trading gap up as a great short set up and the long see the gap as a great exit from an existing trade. This is one of the challenges of our attempts to decode the market action. Each one of us has a different perspective from which we are examining the same elephant. We all have a reason to interpret what we see and say to influence others or convince ourselves that we are right. No one is right or wrong but human nature is subjective and thus leads to the creation of the market whereby both buyer and seller feel that they've been enriched. The message?As you know, successful trading is a result of interpreting a lot of different information in a timely manner. Over the next few weeks I'm going to cover a few ways that can help us to determine if what we "see" is the same as what's really happening.Wishing you trading success,
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