If you are serious about making money in the market develop SA

Situational awareness or situation awareness (SA) is the perception of environmental elements with respect to time or space, the comprehension of their meaning, and the projection of their status after some variable has changed, such as time, or some other variable, such as a predetermined event. It is also a field of study concerned with understanding of the environment critical to decision-makers in complex, dynamic areas from aviation, air traffic control, ship navigation, power plant operations, military command and control, and emergency services such as fire fighting and policing; to more ordinary but nevertheless complex tasks such as driving an automobile or riding a bicycle.

Situation awareness involves being aware of what is happening in the vicinity, in order to understand how information, events, and one's own actions will impact goals and objectives, both immediately and in the near future. One with an adept sense of situation awareness generally has a high degree of knowledge with respect to inputs and outputs of a system, i.e. an innate "feel" for situations, people, and events that play out due to variables the subject can control. Lacking or inadequate situation awareness has been identified as one of the primary factors in accidents attributed to human error. Thus, situation awareness is especially important in work domains where the information flow can be quite high and poor decisions may lead to serious consequences (e.g., piloting an airplane, functioning as a soldier, or treating critically ill or injured patients).

Situational Awareness is a skill that looks at the environment and surrounding forces driving the market action. SA is aviation term that mean as a pilot you must all the time be aware of the situation around you. Loss of SA is blamed on many major aviation accident.

 

Same SA logic is applicable in the market. If you are aware of the market conditions you will play the market accordingly and change or shift your tactics. What if you cold predict what is about to take place in the market and be one step ahead of the situation and position yourself accordingly.

Make a habit of writing your own Situaional Awareness (SA) everyday. It should be actionable SA like say be aggressive on long side, stay out of market till reversal happen, or anticipate a turn, or tighten stop on existing position, or sell in to strength, or fade this move.

Situational Awareness is very critical for swing traders and position traders. By definition day traders have to trade everyday so it does no matter to them.

Situational Awareness will help you avoid risky periods where your setup is not likely to work. It will help you identify periods where your setup is likely to do very well and then you can step on gas pedal. SA will allow you to adjust your tactics like say letting trade run if your SA tells you this is start of a new bull market. Or take profit early if the trend becomes weak or likely to fade.

While some stocks will work independent of the market direction, majority are influenced by the market. Especially at turning points in market this is important.

If you want to be in this game for long term and keep your profits develop SA skills by practicing daily. You will see that all successful traders have some sort of market timing model which helps them avoid some periods in markets.

Don't focus on what others think. Develop a logical framework for your own SA. My framework is driven by market breadth trends, but you can develop your own framework based on market structure.

Do your own analysis and write just 4 to 5 lines everyday. See if market is acting as per your SA. Refine and refine your process over days or months till you are very confident in the game.

In few months you will develop confidence in your own judgement and SA will become integral part of your daily market thinking.

Above all SA will help you to make and keep money.

If you are serious about making money in the market work on developing this skill daily.