Why do traders miss the big moves? People often make decisions on their perception of what the market direction will be. Once they make their directional choice, they become blinded to any other option. They will keep searching for any type of validation to support their analysis even if they are soon losing money. In bull or bear markets people become convinced that things will never end. They fail to recognize that their particular opinion on market direction is wrong. They remain in denial and watch their portfolio balances get sucked dry. Suddenly their plans for a life of luxury are gone. Literally trillions of dollars have vanished from investor accounts that were waiting for the never to be seen rebound. Where do you think the losses went? Well it had to go somewhere, right? Losses go into the accounts of investors armed with solid trading plans. Savvy individuals always prepare for up, down or sideways markets. How is it that so many traders lose money, yet a handful always make a fortune? The answer lies in the concepts of zero-sum trading and trend following.
