The first and simplest emotion which we discover in the human mind, is curiosity.

Edmund Burke

Humans are curious by nature. Observe the behavior of any toddler and you’ll soon discover their favorite word is “why”. Why is the sky blue, daddy? Why can’t I eat Go-gurt for every meal? Why do I have to clean up my toys, daddy?  Why, why, why?

You were endowed with curiosity from the womb, and it remains embedded in your DNA to this day.

In fact, I suspect curiosity is what led you to click on today’s blog post after the title piqued your interest. Your impulse won’t go unrewarded.

No doubt curiosity is an essential part of the learning process. But in the world of trading, the question of “why” can be a dangerous thing. It can lead you on a never-ending quest for certainty; a merry-go-round of time wasting.

For traders, the question “why” is typically thrown about after a stock scores a notable rally or selloff. Why did AAPL tank? Why did oil rally?

The only true, complete answer to the AAPL query is that supply exceeded demand.

The only true, complete answer to the oil query is that demand exceeded supply.

But that’s not good enough for you, is it? No, you want to know why supply exceeded demand for AAPL don’t you? Why did all those people sell shares of AAPL today?

Well, fire up your financial news site of choice and you’ll be greeted with articles aplenty playing the blame game for AAPL stock’s woes. It’s a simple exercise for the writer, really. Just identify any news that may have hit in the past 24 hours and blame it on that.

But does it really matter? Does knowing some random news outlet’s best guess on what caused AAPL to selloff really matter to you as a trader? Who cares if the culprit was poor reception of Apple Music or a shakeup in management or supply issues for iPhones?

I can think of a number of dangers with the “why” obsession.

First, it’s a time waster. All the precious minutes you’re spending satisfying your curiosity could have been spent doing actual productive things like, say, finding a new trading opportunity or managing existing positions.

Second, knowing why doesn’t tell you what to do with your trade.

Third, and perhaps most important, the reason you discover for the stock move may cause you to disbelieve the price action and deviate from your well laid plans.

“Apple broke support on heavy volume and my plan says I should exit, BUT it was caused by news that T Swift (that’s Taylor Swift for all you old fogies) switched out her iPhone for a Samsung and, well, she would never do that – gotta be a rumor. Apple will bounce back. Screw the plan; I’m staying in.”

As a trader I don’t care why something happened. I simply want to be aware of what the stock did and what implications, if any, it has for the stock going forward. The news doesn’t tell you that, the price chart does.

Trade what you see, not what you think.

Financial freedom is a journey

The Tales of a Technician series is brought to you by Tackle Trading.

Sign up now and gain unfettered access to all of the quality content and powerful Scouting Reports that our Pro Members enjoy for 15-days absolutely free with no strings attached and let us show you what your trading has been missing.

# Sign up now for a 15-DAY FREE TRIAL #

Legal Disclaimer

Tackle Trading LLC (“Tackle Trading”) is providing this website and any related materials, including newsletters, blog posts, videos, social media postings and any other communications (collectively, the “Materials”) on an “as-is” basis. This means that although Tackle Trading strives to make the information accurate, thorough and current, neither Tackle Trading nor the author(s) of the Materials or the moderators guarantee or warrant the Materials or accept liability for any damage, loss or expense arising from the use of the Materials, whether based in tort, contract, or otherwise. Tackle Trading is providing the Materials for educational purposes only. We are not providing legal, accounting, or financial advisory services, and this is not a solicitation or recommendation to buy or sell any stocks, options, or other financial instruments or investments. Examples that address specific assets, stocks, options or other financial instrument transactions are for illustrative purposes only and are not intended to represent specific trades or transactions that we have conducted. In fact, for the purpose of illustration, we may use examples that are different from or contrary to transactions we have conducted or positions we hold. Furthermore, this website and any information or training herein are not intended as a solicitation for any future relationship, business or otherwise, between the users and the moderators. No express or implied warranties are being made with respect to these services and products. By using the Materials, each user agrees to indemnify and hold Tackle Trading harmless from all losses, expenses and costs, including reasonable attorneys’ fees, arising out of or resulting from user’s use of the Materials. In no event shall Tackle Trading or the author(s) or moderators be liable for any direct, special, consequential or incidental damages arising out of or related to the Materials. If this limitation on damages is not enforceable in some states, the total amount of Tackle Trading’s liability to the user or others shall not exceed the amount paid by the user for such Materials.

All investing and trading in the securities market involve a high degree of risk. Any decisions to place trades in the financial markets, including trading in stocks, options or other financial instruments, is a personal decision that should only be made after conducting thorough independent research, including a personal risk and financial assessment, and prior consultation with the user’s investment, legal, tax, and accounting advisers, to determine whether such trading or investment is appropriate for that user.