Lots of people licking their wounds today. A few hard-won observations. Aimed at anyone who feels like they could use a pep-talk, not at the many really great traders here who know a lot more than I do. Which is probably most of you.

Kudos to Matt and Steve who I learned some of this from.

1. Lose your bias. The market does not have to do what you think it will do, or what Mr Elliott and his Waves think it should do. It will do whatever it wants to do. The bears were killed today because they were focused on the market going down and did not consider the possibility of it going up. There is a lot of whining on the boards tonight (not here, thankfully) blaming the PPT, the news, Obama, and everyone else. It's a crock. The market isn't wrong or right, the market IS. 

As Bruce Lee says: be like water.

2. Give up trying to predict what the market will do. I admire Matt and Dodger for never EVER predicting what the market will do. They are right. Any time you enter a position it should be in the full knowledge that it has an approximately 50% chance of going against you. Not only that, but at any particular time IN the trade, it has an approximately 50% chance of going against you. Protect yourself with stops and keep your position sizes small enough that you can take the loss. 

3. The market is currently in a trading range. People here are far too focused on breakouts and getting out of the range. The real money is to be made trading the range. For every breakout there are two, three or six tests of the support or resistance which could generate a profitable trade.

The exciting trade is often the wrong trade.

4. Get out of a trade which turns against you fast.

5. If you are daytrading and are sitting on a profit after 2pm, start moving your stops up so that by 3.30 you are hugging the price just a few ticks away.

5a. Position tradingis next to impossible right now.

5b. Swing trading is not impossible but you have to trade the range. Long at 805, short at 870, or whatever. 

6. All markets are correlated at the moment. If you are long SKF and SRS, short ES and NQ, and have puts on GOOG, you are massively exposed.

7. Maybe most important. I was reading some research tonight which suggested that 'market autocorrelation' at the moment is negative. This means, very simply, that on any given timescale, the market tends to reverse. If over the last hour, prices went up, then over the last hour they are likely to go down. You have to move fast.

8. Don't trade the noise. When prices are trading in an 'entertainment range' between critical support and resistance levels, their movements are essentially noise. Nobody can trade noise. It is theoretically impossible. 

9. When in doubt, do the opposite of what your emotions tell you. This is very difficult. It's meant to be.

10. When all else fails listen to RP.