Trade Like an O'Neil Disciple: How We Made 18,000% in the Stock Market

1.11. EMOTIONS AND PREDICTIONS

Trading the market is a very "Zen" activity, where you stay in the now, not worrying about what the market will do in the future, and not getting upset about a bad trade you may have made in the past. Instead one should stay focused in the present, reacting in real time to the evidence that the market is constantly presenting. No one has ever been able to predict market direction with any consistent reliability, but that is wholly unnecessary to being a successful investor. Successful investing is about watching the market day-to-day and acting accordingly. In fact, attempting to predict the market often leads to over-intellectualization, which is usually a recipe for losing money in the market. When the market goes against your own intellectualized "conclusions," you may be less likely to reverse your position, even in the face of factual price/volume action that is telling you that you are wrong. Pay less attention to what you think the market should be doing, and more to what the market is actually doing. As Livermore wrote, "Don't try and anticipate what the market will do next—simply go with the evidence of what the market is telling you—presenting you." (Richard Smitten, Trade Like Jesse Livermore [Hoboken, NJ: John Wiley & Sons, 2005], 13).

In the same vein as Livermore, O'Neil preaches that an investor does not need to know what the market is going to do, but only what it is doing right now. O'Neil wrote in How to Make Money in Stocks, third ...