Why ITPM Traders Should Fear Consensus: The Hidden Dangers of Following the Crowd

Most traders think following the crowd is the safe play. But when everyone leans the same way, the fall is even harder. This article breaks down how consensus creates risk — and how seasoned traders like Edward Shek from ITPM sidestep the stampede with smarter, risk-adjusted thinking

The Illusion of Safety in Numbers

It’s easy to fall into the trap of consensus thinking. If everyone’s bullish, that must be the right side of the trade — right?

Wrong.

Edward Shek, senior mentor at the Institute of Trading and Portfolio Management (ITPM), made it crystal clear in a recent webinar: consensus is often where traders get hurt the most.

“Consensus is where you get killed.” — Edward Shek, ITPM

The reality is, the more crowded a trade becomes, the more fragile it gets. When everyone’s positioned the same way, it only takes one unexpected headline to unwind everything — fast.

📉 Why Consensus Is Riskier Today Than Ever Before

Back in the '90s, consensus trading might not have been as dangerous. The market was dominated by institutions with longer time horizons and stronger risk frameworks.

Today? It’s a different game.

Retail traders now move huge chunks of the market. Their behavior is:

• Short-term oriented

• Heavily momentum-driven

• Emotionally reactive

That means when things go wrong, they tend to go wrong fast — and the exit gets crowded. If you’re in a crowded trade with weak hands all around you, you’re likely to be caught in the stampede.

⚠️ What Does a Consensus Trap Look Like?

Let’s break down a real-world example from a recent ITPM webinar led by Edward Shek.

📰 Case Study: Tariffs and the “Everything Will Be Fine” Narrative

In the lead-up to U.S.–China tariff announcements, market sentiment was overwhelmingly optimistic. Retail and institutional traders alike assumed:

• Tariffs would cap at 10%

• Talks would progress

• The market would continue rallying

That was the consensus. And markets reflected that — low VIX, tight high-yield spreads, equity strength.

But here’s the kicker: When the announcement came and matched expectations, the market barely moved. Why?

Because the outcome was already priced in.

⚠️ Another Example: April 2nd “Liberation Day” — When Consensus Got Crushed

A textbook consensus trap played out on April 2nd, now referred to in the webinar as “Liberation Day.”

Here’s what happened:

• The market had rallied in anticipation of a favorable outcome to the U.S.–China trade dispute.

• Traders were convinced tariffs would come in lower than what was feared — possibly even rolled back or paused.

• But when Trump announced higher-than-expected tariffs, the market tanked immediately.

Why? Because everyone was on the wrong side. Everyone was long, betting on relief — and when that didn’t materialize, they ran for the exits.

“It was priced for a win. And when we didn’t get that win, it was a bloodbath.” — Edward Shek, ITPM

This wasn’t just a selloff — it was a mass liquidation of consensus longs, many of which were retail-driven and poorly structured.

This moment highlighted just how fragile the market becomes when everyone is betting the same way.

➡️ Enter the “Buy the Rumor, Sell the Fact” Moment

Everyone who was positioned for a positive surprise got... nothing. Or worse — a mild or severe selloff.

“If the market is pricing in 10% tariffs and we get 10%, where does the upside come from?” — Edward Shek

This is the danger of consensus. You can be right... and still not get paid.

🤯 The Psychology Behind the Herd

Let’s talk trader psychology for a sec. Here’s why so many fall into the consensus trap:

Common mental triggers:

• FOMO — “Everyone’s in, I’ll miss the move if I don’t act.”

• Overconfidence — “The market clearly agrees with me. I must be right.”

• Recency bias — “The last three times this setup worked, it’ll work again.”

But what Edward Shek teaches at ITPM is that professional traders don’t seek validation from market consensus — they seek asymmetric risk-reward setups.

That often means positioning where others aren't.

🔄 Why You Don’t Need to Be Right to Get Paid

One of the most powerful takeaways from Edward Shek’s teaching is this:

“You don’t get paid for being right. You get paid for structuring your trades in a way that you don’t get hurt — and get paid when you’re right.”

This is why risk-adjusted setups matter so much.

They allow traders to:

• Profit if the crowd is wrong

• Survive if the crowd is right

• Scale in once the market confirms direction

You're not guessing. You're planning.

🏃‍♂️ The Exit Stampede: Why It’s So Fast Now

When consensus fails, the drop-off is sharper than ever.

Why?

• Retail traders tend to move together (thanks to social media, Discord, Reddit, etc.)

• They also react faster — cutting losers after a small dip or panic headline

• And often, they're all in the same names (tech, meme stocks, AI hype, etc.)

Edward Shek highlighted this in the webinar:

“If everyone’s in the same names and it drops 10%, they all get stopped out — and that’s when the market breaks.”

Avoiding this means thinking in portfolio terms, not just single names.

🧠 Key Takeaways from Edward Shek (ITPM)

Let’s recap what every trader should remember:

• Consensus is NOT safety. It’s often a trap.

• Structure > conviction. You don’t need to be right — just positioned well.

• Don’t chase headlines. Let the market confirm, then size up.

• Retail flow changes the game. Discipline matters more than ever.

🏁 Final Word: Be the One Who Thinks Differently

If you're just following what everyone else is doing, you’re already behind.

Markets reward independent thought, calculated structure, and discipline under pressure — not blind conviction.

Edward Shek and the team at ITPM teach traders to stop chasing consensus and start thinking like portfolio managers.

Want to trade like that?

🎯 Check out the PTM 2.0 Program from ITPM — where traders learn to build balanced, risk-adjusted portfolios that don’t rely on guesswork.

🙋‍♂️ Frequently Asked Questions (FAQs)

1. Who is Edward Shek?

Edward Shek is a senior mentor at ITPM (Institute of Trading and Portfolio Management). He’s a former institutional trader known for teaching structured, professional-level trading strategies.

2. What is consensus trading risk?

It’s the risk of being on the same side of a trade as everyone else. When too many traders are aligned, even small surprises can lead to sharp reversals.

3. How does retail trading affect market consensus?

Retail traders often pile into similar positions based on news and hype. This creates crowded trades that are more volatile and more fragile when things shift.

4. What’s the alternative to consensus trading?

Traders can focus on risk-adjusted setups, using smaller positions and hedged exposure, so they’re not dependent on one outcome or prediction.

Disclaimer:

The information contained in this article is provided for general informational and educational purposes only and does not constitute financial, investment, or other professional advice. The content reflects the personal opinions of the author based on publicly available information at the time of writing and should not be relied upon as the basis for any investment decisions. Earnings reviews may contain forward-looking statements that are inherently uncertain and subject to change.

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