This is a Guest Post by: Colibri Trader @priceinaction. This article is used here with permission and originally appeared here on ColibriTrader.com.
Imagine you are driving your car and you come to a fork in the road. The road sign is missing and you have two options- turn left or turn right.
Or maybe not!
Of course you could always turn right or turn left. You might also consider:
Check your GPS.
Consult with your map.
Turn back and look for another way.
Wait for someone to pass and ask him/her.
Take a blind chance.
Just stop for a minute and think about your options all over again.
Although subconsciously people are thinking of two chances, they should challenge the dichotomy thinking processes and don’t close the door of possibilities. Maybe there are more than just two possibilities.
Same goes with trading.
It is very difficult to obtain the full set of possibilities in each and every trading situation, but you should at least try to do better than simply either/or.
Any new idea is a possibility. Each alternative scenario is as good as the most logical outcome.
In many occasions, the alternative scenario is impractical, but from it may be extracted a valuable concept, which can indeed be used.
In my opinion, trading is probably one of the best (if not the best) example of various possibilities, especially for the one with the open mind!
So, there are certainly more than two possibilities.
The questions is, which one will you choose.
p.s. Check out my popular articles on Support and Resistance and Candlesticks