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@ Henrik Ekenberg
2025-03-10 16:18:21
Many 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**.
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## **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.
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## **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.
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## **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**.
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## **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. 🚀