Would not mind some feedback on these thoughts:
"Winning"
~~~~~~~~~
Imo, the feeling of winning is more important to a trader than the
winning itself. We must *allow* ourselves to win.
If we enter a long and it runs in our favour and then we book it,
then allow yourself to win. The decision to book it has to be based
on something, the best information at the time, and so you
congratulate yourself for making a good trade. What happens after
the trade is nearly irrelevant.
Too often we subvert ourselves. How do we do this? How do we turn a
win into an emotional loss?
1) If the chart continues up, too often we'll figure out how much
we "lost" and we negate our win with regret. "Damn, I should have
held."
2) If we sell too late, even though we made money, we'll feel angry
at not having sold at the top. "Damn, I should have sold earlier."
3) If the thing really dumps we might allow ourselves to get angry
that we didn't short it. "F*ck, I knew it was a top. Why didn't I
short?"
There are even more ways than this that I can think of, but I think
these are the top 3 reasons.
There is a reason that they call it the "hard right edge". Things are
easy to see when you get price data after your decision (hindsight),
but at the hard right edge where there is only today's bar. Whatever
the outcome, what else can you do but make the best decision given
what you know then.
Now, over time, if you analyze your trades and change your technique
based on what you could have done better, then I think one has to
accept that it isn't going to work all the time. For example, I have
a habit of getting out too quickly. If I really tell myself to try
harder to stay in a winning trade, then from time to time, I am going
to get hosed. My instinct is to deride myself, but what I want to do
is to remind myself of why I made the decision and to further remind
myself that it's about odds -- on average, I believe I am using a
better technique even though this trade didn't work out.
A related topic for another time is congratulating yourself for
good losses. Getting out at a small loss can be a very nice win. |
