The Mind of the Other Side

There are obviously two sides to every trade – one guy buys shares from another guy selling shares; and the interesting thing is, they both think they’re right. Or do they?

The market isn’t simply black and white. What we all see isn’t always what it appears to be. In any particular transaction, there are many factors at play in terms of reasoning behind a trading decision. Are both sides operating in a long-term mindset or are they operating in a short-term view? Perhaps one side has an ulterior motive behind the transaction; therefore, games are being played. These scenarios can go on and on; point is, understanding the number of possible realities behind market moves puts you in a much better position to make systematic trading decisions.

Of course, it’s not possible to know the exact mindset of the other side of a trade; however, allowing yourself ‘if this, then that’ scenarios, offers a foundation to base decisions off of.

That said, there are plenty of clues to look for which will tip probabilities far in your favor.

Yes, set-ups – patterns; (whatever you’d like to call them), play a role in trading decisions. However, the importance in which they hold greatly depends on YOUR trading mindset. Are you looking to scalp 10-20c moves with 1:1-1:2 risk/reward or are you looking for bigger point+ moves with 1:5+ risk/reward trades?

Charts tell a story. By looking at certain key levels and timeframes, a trader can put together probabilities of the other sides’ mindset. Where are THEY looking? Where are THEY taking price? Why are THEY making this move at this level? By looking a bit deeper than the usual basic technical analysis, a trader can begin to understand the WHY behind the what.

Think poker. Professional poker players that continuingly win tournaments are of course, great poker players; but they’re even better at reading their opponents behaviors. When you’re playing at this level, a player can beat their opponents by simply reading their body language – their “tells”. Their poker skills go far beyond the basic winning hands.

Of course, with electronic trading, we can’t read the body language of other market participants, but we can see the footprints being left on the chart that can give a trader clues as to what the other side of the market is looking to do – big picture.

Again, this all depends on the style of trader you are; but nonetheless, keeping a big picture outlook will allow you to remain in the trade longer.

We’re not scalpers. We don’t teach our students to look for 1:1-1:2 risk/reward trader; we take trades that are 1:5+ r/r. So, we patiently wait for the real move to occur and then take the meat of it – you can have the head and the tail – we’ll take the meat!

What’s your strategy?

All that said, it’s crucial to not be blinded by the mindset of your opponent – the other side of the trade. Take the time to understand alternative possibilities and play both sides of a trade. When you do this, you’ll see moves as more than what’s initially being printed on the chart.

Active players may sacrifice a few crumbs in the morning session, for the whole pie in the afternoon.


Members, we’ll be going deeper into this concept on our VLOG.


July 30th Trade Ideas

Heavy selling going on in today’s PM session. The boys are about to step in and either continue the bleeding or stop it. It’s Friday after another ATH print

Read More »
Translate »