Market moods – Reading the signs

Imagine if we could just ask women what they were thinking” – Jerry Seinfeld.

In the very first episode of the hit TV show ‘Seinfeld’, a lady that Jerry is interested in calls him and mentions that she’ll be in New York and they may catch up while she’s there.

Jerry shares this story with his friend George, hoping this is his chance to get to know her better, however George confidently proclaims, “You will NOT be seeing this woman”.

How does George know?

By “reading the signs.”

She ‘HAS’ to come to New York for a conference…

She ‘MAY’ meet up…

Plus, Jerry doesn’t know where she’s staying, so he can’t even contact her to organize a meeting.

Reading between the lines, it appears she only let Jerry know to be polite and she actually has no intention to catch up with him when she visits New York. It leaves Jerry frustrated and confused, not knowing how to proceed, and wonders “imagine if we could just ask women what they were thinking.”

As traders, wouldn’t it be great if we could just ask the market what it was thinking?

Especially over the last week or so – the erratic and volatile mood of the market has really caused some frustration and confusion for traders and trading strategies.

Unfortunately, we can’t just ask the market, so we have to learn to “read the signs”.

There are a few ways we can do this:

Look at your best trades, what is the market doing before these trades occur? Is there a scenario or environment that precedes your best trades?

What about your worst trades, are there specific market conditions or patterns that occur before your worst trades?

This type of study can lead to valuable insights and help “read the signs”.

Another approach is to use Market Internals, which can reduce frustration and confusion by uncovering the underlying mood of the market – revealing signs which aren’t visible using price charts alone.

If you’d like to see Market Internals in action, reducing drawdowns and improving trading performance, check out the case studies here and here.

Happy trading,


12 February 2018

Scroll to Top