Four realities of our choices
These are the four realities of our trading decisions:
- We take a trade and we make money.
- We take a trade and we lose money.
- We don’t take a trade, and we don’t lose any money.
- We don’t take a trade, but we lose the opportunity to make money.
These realitiesÂ are an adaptation from the book Take the Risk through the brilliant thinking of the world class pediatric neurosurgeon Ben Carson.
We need toÂ get into theÂ trades without taking excessive risk, and there is an art form to that. On another day we can explore the very specific entry techniques that are used depending on the type of day that is evolving.
I listened to a trader today call for shorts at least five or six times against the trend. They finally gotÂ the stopped clock tradeÂ right at the normal contra time. If they were trading real money, I can assure you they lost more by being wrong five times and right once. Guessers have a way of forgetting that simple truth.
A normal rule of thumb for many disciplined traders is to stop trading after two stop outs to prevent blowing up their accounts when they are out of synch with the day’s movements.
We crossed the 100 point threshold today from the lows of the year.