I haven't been trading this week due to computer problems and the need to catch up with clients while I prepare to leave on a 2-week vacation early Friday morning.

With a market driven by news headlines and ‘breaking stories’, there has been no shortage of people making predictions. In this environment, it’s very easy to get locked into a rigid scenario based on your or someone else’s prediction.

When your trading is driven by a prediction mind-set, what happens is that your need to be right becomes even stronger. When we make a prediction, we easily become emotionally attached (ego can get attached as well) to that prediction coming true. And if the market does not conform to how you predicted, you can become very emotionally reactive…leading you to make irrational decisions.

Everyone already has a need to be right to some degree, you don’t need to reinforce it with a prediction. Reinforcing your need to be right makes you more rigid, less nimble and unable to adapt what the market is actually doing.

Instead of prediction, try to approach the market with anticipation. There is a subtle but very critical difference between anticipation and prediction. Anticipation involves developing hypotheses, or potential scenarios, and preparing to respond to potential scenarios. And that is much different than getting locked into a prediction. The need to be right makes your thinking rigid and less adaptable to ‘what is’.

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