The ego is a big part of a day trader s demise in the long run. When ego leads decision making, over time there is no possibility for consistency. Another condition that newer day traders exhibit is the uncanny ability to try to make sense out a market that acts in an illogical manner. I m talking about why markets move down in the face of positive economic events or why stocks move up on negative news. Logic says that the market correlation should be evident.
All bad news creates a downward move and all good news creates an upward move.
This obviously isn t always the case. Market Makers, institutions, analysts and retail traders all have their own intentions and opinions about where valuations in stocks and the market should be. It is very difficult however to determine what these large capital base firms are doing as they do it. For most, it is downright impossible. This is what leads to day traders wanting the easy explanation for what happened.