Understanding that the market is random is probably the key tenet of becoming profitable. I have done it all in terms of predicting the next action of the market. Elliott Wave, harmonic trading, point and figure, classic breakout estimates, etc. etc. At times the market would adhere to my analysis, which would make me feel like I was in control of the situation. However, there were times when the market would pass through my key level as if it didn’t exist. Now that I’ve been doing this for 4 years, I now realize that my analysis does not exist anywhere else but in my head. The only reason the market would respond to my analysis is based on whether or not the other active traders who can influence the move of my stock are on the same page as I.

It only takes one trader with enough capital to completely invalidate your analysis. It doesn’t take a herd of people yelling and screaming on the floor or placing thousands of trades over the internet. It only takes one person somewhere on planet earth to decide that the stock should go higher or lower.

So, where does this leave you? I will never tell you to not perform some level of analysis, because I believe in technical analysis. What I am saying is you must remove any emotional attachment for what the market can or will do next. You have to believe that the market will and can do anything. Until you come to this realization you will always cut profits short or get stopped out short of the breakout move, because your analysis has told you that if x happens then y is right around the corner.