"When everyone joins the parade, it's time to become a spectator."
There are several situations and conditions where this applies. Sometimes, depending on the mood.
There are days when I don't want to join what everyone else is doing. It is usually when I get bored with the same old set of conditions or I feel like going on a scavenger hunt, looking for a rare gem.
At times I think of it when I observe some equities that are constantly being traded the same way. I do not like to be in the fray of that. Call me adventurous but I prefer to find my own ins/outs although it may not be the most precise.
The question often comes about when to take profits during a run; to which the answer is, "when everyone joins the parade". When you see a thick candle, shooting high, it means traders are piling, when it becomes a thin wick, it means too many people are on board and the boat is threatening to capsize. Of course the timing can be difficult, which is why it's good to watch the volume yet as the stakes get better it becomes more nerve wrecking, that is when I recommend stepping back and skimming. Go ahead, take some off, it will relieve your anxiety knowing that you have banked some profit, and now you can watch the parade.
Imagine seeing a run on the bank, it usually means people wanting to take all of their money out, and you may be glad that you took some of your money out before the stampede. Of course some stampede is good, because it drives the momentum for a better exit price, the idea is however to take some off for comfort, the rest can be left to accumulate and ride with the wave further.
The same saying also applies when you have missed an entry and you watch the run; temptation what it is, you may be tempted to chase, but become a spectator instead and watch the parade, it'll teach you and no one will be allowed to rain on your parade.
Happy Trading, Living and Dancing
Anni
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