26/01/2025
“What has happened in the past will happen again. This is because Markets are driven by humans and human nature never changes.”
Now, markets are primarily driven by two emotions — greed and fear.
When the market is greedy, you get an uptrend.
When the market is fearful, you get a downtrend.
And when the market is undecided, you get a consolidation or range markets.
Now you might be thinking…
But with the introduction of Algorithms and high-frequency trading (HFT), won’t the market behaviour change?
Well, yes and no.
Yes, the markets have changed in terms of microstructure.
This means the markets are more liquid and less volatile with more players in the market.
But looking at the big picture, the market still behaves the same — it trends up, down, and range.
You might argue…
“But machine don’t have emotions when trading.”
You’re right.
But remember, these machines are controlled by a human — and a human being has emotions.
For example:
If a system does poorly, fear kicks in and the human trader will intervene and pull the plug.
Or if the system does well, greed kicks in and the human trader will trade larger (and even take on more risk).
That’s why Jesse Livermore said…
“What has happened in the past will happen again. This is because Markets are driven by humans and human nature never changes.”
“It was never my thinking that made the big money for me. It was always my sitting.”
