Inventories are the things that make you, you.
We are talking about your beliefs, your way of thinking, and your habits. Maybe you are thinking, what has that to do with trading? Short answer: everything.
For a more in-depth answer, some background information:
Let’s breaks this down.
Beliefs: Every person has a past, experiences, upbringing, and environment. These four combined shapes your beliefs about everything in your life.
Some beliefs are obvious other beliefs are very well hidden from you.
You have to know what you believe to become a trader. There are unlimited ways of making money trading. But there are only a few ways of trading for you to make money.
The sooner you understand that your trading must be aligned with what you believe, the sooner you will have the results you want.
There are two ways. You change your belief or you adapt your trading style to a belief you have.
Let’s give an example. If you see a chart, like this:
Do you believe it will go further up, or do you believe it will come down?
Whatever you choose, it is based on your beliefs that are formed in the past.
Let’s say you think it will come down. Your decision could be based on a contrarian view and a belief that the move is overextended. Therefore you could be more comfortable with reverse to the mean kind of trading systems.
Let’s say you think it will go further up. Your decision could be based on a follow the trend kind of idea or belief. You would be probably more comfortable buying breakouts or new highs.
Same chart, different beliefs, different action people take. The kicker is, that both traders and both views or beliefs can make money with their beliefs. It is just that your trading system has to be built around it.
That is why you must first find out what you believe.
The more you spend time on this, the more 'stress' free trading you will get.