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@ Henrik Ekenberg
2025-03-10 16:18:21Many traders and investors fall into a dangerous mindset: thinking the market is "too cheap" and should go up, or "too expensive" and should go down.
This kind of thinking leads to forcing your view onto the market—which is one of the most expensive mistakes you can make. The market doesn’t care about your opinion. It moves based on supply, demand, liquidity, and psychology—not what you think it “should” do.
If you want to succeed in trading, you must learn to read and follow the market, not fight it.
The Market Doesn't Care About "Cheap" or "Expensive"
Let’s break this down:
1. Cheap Stocks Can Get Cheaper
- A stock dropping from $100 to $50 may look cheap.
- But if it’s in a strong downtrend, it can drop to $30, then $10.
- "Cheap" is never a reason to buy—you need confirmation that demand is returning.
2. Expensive Stocks Can Get Even More Expensive
- A stock at all-time highs may seem overpriced.
- But if demand keeps pushing it higher, it can go much further than most expect.
- "Overvalued" stocks can stay overvalued for years while continuing to climb.
📌 Example: Tesla (TSLA)
- In 2019, Tesla looked "overpriced" at $50 (split-adjusted)—many traders shorted it.
- By 2021, it hit $400—a 700%+ increase.
- Those who tried to force their bearish view onto the market lost everything.
The Cost of Fighting the Market
Forcing your bias onto the market is a losing game.
- If you short a stock just because it "looks too expensive," you might get squeezed.
- If you buy a stock just because it "looks too cheap," you might be catching a falling knife.
Instead, you must follow the price action and trade what’s actually happening—not what you think should happen.
How to Read and Follow the Market
1. Price Is the Truth
- The market’s job is to price in all available information—fundamentals, news, expectations, liquidity.
- Your job is to analyze what the market is actually doing, not what you think it should do.
- Uptrends = buyers are in control. Downtrends = sellers are in control.
2. Trend Matters More Than Your Opinion
- Uptrends tend to continue → Look for strong stocks making higher highs.
- Downtrends tend to continue → Avoid trying to catch the bottom.
- Sideways markets are uncertain → Wait for confirmation before acting.
3. Follow Strength, Avoid Weakness
- Strong stocks keep getting stronger—leaders emerge from healthy markets.
- Weak stocks keep getting weaker—avoid stocks in long-term downtrends.
- Always ask: "Is the market rewarding this trend?"
📌 Example: Nvidia (NVDA)
- Many thought NVDA was “too expensive” at $200 in early 2023.
- It kept running past $400, then $500—doubling in value.
- Those who followed the trend profited, while those who fought it got crushed.
Final Thoughts: Adapt or Lose
🚫 The market is never "too cheap" or "too expensive"—it just is.
🚫 Trying to force your view onto the market will cost you.
✅ Your job is to read the market, follow the trend, and adapt.The market rewards discipline, patience, and trend-following—not stubborn opinions.
💡 Action Step: Next time you feel the urge to fade a strong trend or buy a falling knife, ask yourself: "Am I trading my opinion or the actual market?"
Trade what’s happening—not what you wish would happen. 🚀