The Mirage of Trends – When We Follow the Crowd in the Market and in Life

Javier, a young trader, saw how everyone was talking about a stock on social media. WhatsApp groups called it “the opportunity of the year,” YouTube analysts featured it on their covers, and even the news showcased it as the market’s shining star. Javier didn’t want to be left behind. He entered right at the peak. A few days later, the price began to fall, and he realized he had fallen into the mirage of the crowd.

What Is a Trend?
In trading, a trend is the general direction of an asset’s price over a period of time. It can be bullish (price rising), bearish (price falling), or sideways (price staying stable within a range). The most common mistake is thinking that because the price has gone up for several days in a row, it will continue rising indefinitely.

This is known as the trend mirage: when an upward move looks endless, but in reality, it’s the end of a cycle.

     

                               Figure 1. Example of a mirage: the price seems to break upward, but soon pulls back.

The Emotional Cycle of the Market
Financial markets move in emotional cycles: optimism, euphoria, anxiety, and fear. In the euphoria phase, most people enter too late—right before the market changes direction. That’s why it’s so important to learn how to detect when a trend is healthy and when it’s about to run out of steam.

Analogy with Real Life
This mirage also happens outside the stock market: when someone buys a house because “everyone is doing it,” when someone takes on debt because their friends are upgrading their cars, or when someone starts a business without analyzing if it truly has a future. Following the crowd is rarely a synonym for success.

Our Experience
Ismael Monte de Oca, with experience since 1997, and I, Marlen GonzaleZ, since 2011, have seen thousands of investors lose money by following the masses. The key lies in learning how to identify technical confirmations—volumes, patterns, and resistances—before believing in a simple price rally.

Conclusion
The market is full of mirages. A trend may seem eternal, but nothing goes up or down forever. The true trader learns to look beyond the noise—with technique, patience, and preparation. That’s exactly what we teach in our Success, Profits, and Wealth Seminar: how to detect when a trend is real and when it’s just a mirage that traps the crowd.