Challenge all assumptions regularly | stockbee

8/30/2014

Challenge all assumptions regularly

Market participants have lot of assumptions or pet theories, you should challenge these assumptions and form your opinions based on only what you personally can verify.

As you develop more skills and become ware of lot more steps you must regularly challenge old assumptions.

If someone says only buy stocks at 52 week high or only buy stocks above say 50 MA, you don't get into argument with them , but find out for yourself whether that assumption is true. Many times that condition is part of the setup they use, but that does not mean it is true in all conditions.

As you grow as trader you will find challenging old assumptions leads to new setup ideas and different profit opportunities. Many times as a trader you start trading a setup and gain expertise on it and gain confidence and then you become dogmatic about it. having invested lot of effort in making that setup work, you are too invested in it to challenge certain core assumptions.

That process is important to broaden your choice of setup and have conviction in your setups.

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