Is a seemingly random market move really random? And if it is, so what? The markets of the world often seem to move at random but they are comprised of a huge number of trades. The trades are driven by a huge number of decisions to buy or sell, at a given price, by traders large and small.

There are times when markets seem to move randomly, not rationally. Seemingly random market moves are a sum of the response to information, market psychology, personal psychology, and the reported news of the day compounded by rumor and “market tips.”

Part of the work of the successful trader is to learn how to deal with apparently random market moves. To an extent your software will help because it is better than you at comparing current activity to a large database of stored information and doing fast calculations. However, the question is always this. Is the random market move just what you would expect from statistics or is there some piece of information hidden inside the static of the market that predicts a breakout up or down?

Here we get back to preparation, homework, time allocation, and all of the dry stuff that prepares you to take advantage of market moves whether they are seemingly random market moves or ones clearly predictable by a knowledge of current events and market psychology.

At times the short-term trader needs to stand in the shoes of the long-term investor. Know the underlying forces that will move the market over time and come to understand the psychology as well as the reasoning that makes a big long-term investor commit his of her funds. When you understand this mindset you will be ready to capitalize more fully on big market moves.

Scalping is a good way to make money in the markets, taking a little with each move, in and out. However, there are times when you will get into a trade with the intention of scalping and will see an opportunity. The more that you can “unrandomize” apparently random market moves the more times you will be able to hold what you thought was going to be a temporary position until you make a substantial profit.

Knowing the mind of the other guy will help you at those times of market breakout, up or down, to see something that looks like a random market move as the start of a tectonic shift in market forces.

This kind of preparation and thinking is similar to cross training in sports, it gives you not only knowledge, but also perspective. It is the key to seeing the bigger picture and capitalizing on what seems to start as a random market move and is really the cash to buy your penthouse on the park, or perhaps that yacht you have always dreamed of!

On these pages we typically try not to get too far away from the nuts and bolts of trading. However, you are in the business to make money. The broader your horizon and the stronger your skill set in day to day, minute to minute trading, the more likely is it that you will see within a seemingly random market move the largest profit you will ever make in a trade.

It all comes from preparation, practice, and focus.

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