As traders, we often scratch our heads over strange stock moves:
- A company lands a massive contract but barely moves.
- A takeover offer appears, yet the stock barely reacts.
It’s easy to fall into the trap of thinking like an analyst rather than a trader.
The Trader vs. Analyst Mindset
If you’re building complicated Excel models to value every ticker in your watchlist, congratulations — you might be training for sell-side equity research, not discretionary trading.
A trader’s job is different:
- Listen to the chart.
- Allocate risk when proven setups appear.
- Having a view is fine, but don’t impose it on the market.
I’ve made this mistake countless times — yelling at news headlines, wondering why stocks moved “illogically.” Often, the people complaining were the ones fading the move, not making the money.
The truth: Price action and the intraday chart trump everything else.
A Simple Heuristic to Avoid Analyst Traps
Let me illustrate with a real example:
On August 13, 2024, a friend texted me about shorting Starbucks after the news that they replaced their CEO with the CEO of Chipotle.
- Starbucks is a $100B company — how much should a CEO swap move the stock?
- My guess: maybe 5–10%. Intuition would never suggest 15–20%.
Yet Starbucks traded 25% higher the next day.
My advice? I wouldn’t have touched the ticker. Why? The intraday chart didn’t show any setup:
- Price was too steady.
- No extreme acceleration.
- No intraday chart setup for my system.
When I asked my friend, “If you didn’t know the headline, would you have shorted based on the chart alone?” — his answer was no.
The Key Takeaway
As discretionary traders: price action and chart structure come first.
- Treat news as binary: either fresh news exists, or it doesn’t.
- Before acting on a headline, ask yourself:
“If I didn’t know the headline and only had the chart, what would I do?”
Answering this objectively allows you to capture trends rather than fight them.
Trust Trader Logic
Many traders overcomplicate by thinking like analysts. This can put you offside of the market. By trusting your chart, listening to price action, and using this simple heuristic, you can:
- Avoid unnecessary risk.
- Follow the trend instead of fighting it.
- Capture moves that others miss.
Remember: We don’t get paid to be analysts. We get paid to trade the chart and price action.
