One tough lesson we all wind up learning during our time as traders, professional or otherwise, is that being right means nothing and being profitable means everything. Now that statement does not give you license to simply follow your whims as long as you wind up being profitable in the end. Instead the point I’m making is that you can be right but still wind up losing, especially when Ms. Market decides to turn into bitch mode. Did that sink in? It should because there are important implications:
To make sure you guys aren’t getting bored I decided to repost some timeless favorites from our Evil Speculator archives. Clearly the fight against information overload never ceases and is becoming more prevalent as the world is becoming more connected every day. As traders we need to give special attention to not only what information we expose ourselves to but also how much of it (good or bad) we let in every day.
I had to kick that mythical German discipline into overdrive today as I kept tripping over juicy looking but yet immature setups. Practice what you preach they say. If you read yesterday’s post then you recall my thoughts on why premature (discretionary) entries can lead to early stop outs, that they will affect your position sizing, and that they affect you psychologically if you let them. Another perhaps more obvious aspect I didn’t delve into was the fear of missing out, a.k.a. greed’s ugly cousin.
You probably can remember at least one campaign in your trading career you regret having missed out on. It’s the ‘one that got away’ despite your best efforts to grab a position when conditions started to align in your favor. For me personally it continues to be one of the biggest psychological as well as technical hurdles to grapple with: When is the perfect time to get positioned? Well, that’s easily answered of course: Just before it starts taking off!