BACK TO THE FUTURE VS TRADING

I watched the Oscars recently and saw Michael J. Fox receive his humanitarian award. This brought me back to my childhood with the legendary Back to the Futures movie...

Also this year we saw The Back to the Future stars Doc Brown (Christopher Lloyd) and Marty McFly (Michael J. Fox) reunited and shared the stage at the New York Comicon 2022.

This is where they reminisced over their iconic roles in the beloved film trilogy.

There were a bunch of mixed emotions but mostly the feeling of nostalgia and childhood memories…

And so, I watched the trilogy and I found it was super interesting to watch a movie when at the time, they were trying to predict the future by making a number of predictions about 2015…

They certainly got a few spot ons such as:

• Smart watches
• Hover boards
• Virtual reality headsets (which we use Quest, PlayStation and even HTC)
• Talking from TV to TV (Instead we use tablets and smart phones, but close enough)
• Donald Trump like figure as president

They also made a few wrong predictions like:

• People wearing their pockets inside out
• Dogs having drones walk them (but we do have drones though)
• Mechanical car fuel attendants
• Pizza hydrators

But overall, there is a very big lesson we can learn from this…

If scientists, businessmen, producers, directors and actors can’t accurately predict the future, nobody can.

And trading the financial markets are similar to “Back to the Future” movies.

It’s unpredictable and normally plays out differently to what we think…

Thing about the future is… When you know what is going to happen and you act according, the future changes…

Let’s say you know what’s going to happen at a certain point in the future. If you act according to what will happen in the future, then your action will change the future.

So, if the future is so unpredictable, how can anyone ever make money from trading?

Simple.

You don’t need to know the future when you trade

When you take a trade, you should never try to predict where the market will go.

Instead, we should base the future predictions and decisions on one word.

Probability.

If the market is moving up, there is a higher chance it will continue to move up. (It’s going up for a reason).

If the market consolidates in a sideways formation and then the price breaks down, there is a higher chance the price will continue to move down.

We say, go with the trend rather than against it… Our job is not to predict every turn and bank a profit from every point move.

Our job is to anticipate a change in the market, wait for confirmation and then act accordingly to follow the MORE likely scenario… You might not get it right 30% to 40% of the time, but you can get it right 50% - 70% of the time during certain market environments…

That’s all I do when I do trades and analyses… I base probabilities on where a market is more likely to go at a certain time…
If I’m wrong, I adjust – rather than deny…

This was a short reminder of why you don’t need to predict the markets to make it as a trader.

Did you enjoy this short piece? Let me know in the comments. It's a passion to help share the knowledge I've gained over the last 20 years as a trader.

Trade well, live free.
Timon
MATI Trader