For years I thought the bane of my trading attempts was my desire to be right about a trade. I noticed that when I was convinced I was right I had to use much more self discipline to refrain from scaling up or buying more or leaving a wider stop, and when I thought I was wrong I had to use self discipline to refrain from skipping a trade altogether, selling early, sizing my position smaller, or tightening my stop. I'm sure most of you can relate. And like most, my self discipline was far from perfect or consistent. But I just figured out what the REAL problem is. I don't value being right, I actually value money. I am trying to grow my trading account and that is actually the problem. =if(value money, preserve money, risk money) This is an excel formula. It means that if I value money I will try to preserve what is left if I feel that it is going to be lost (take the money and run) and I will try to risk more and put more on the table if I feel that it is going to be won. So in essence, my belief about the future (something none of us can know, and something about which the market does a fantastic job of fooling us), decides my strategy. If I believe I will lose, then losing $150 is better than losing $200. I'm $50 better off my making that decision, so I sell early before the stop is reached. If I believe I will win, then losing $200 just to see it turn around and go in my favor is worse than letting it go a few more pennies to give it a chance to rocket upwards. So I let it go and ending up losing $300 before I cut it off (usually at the REAL turning point after I'm finally convinced that I was wrong). So the new formula for winning is this: =if(value steadfastness, nothing, nothing) It means if I truly value my integrity and my steadfast decision-making more than I value money, I will not care about the $50 difference between -$150 and my actual stop at -$200 nearly as much as I will value seeing it through till the end. So when I'm convinced that I am wrong, I will do nothing. Likewise, if I value steadfast decision-making more than money I will not care about the possibility that it will move favorably just pennies after hitting my stop nearly as much as I will value the sense of pride I get from successfully following through with the pre-determined plan. So when I am convinced that I am right, I will do nothing different, regardless of price movement. So it seems now that the trick is to change my values from valuing money to valuing my integrity. Finally I know what my values need to change from and what they need to change too. That has been a huge mystery for me as I thought for years and years that I valued being RIGHT. Looking forward to the next months to see what happens. Wish me luck.
You've hit the nail no the head. Once you have no attachment to Money or outcome and only see the market as an opportunity and are able to cut losers and let winners run, you will be consistently profitable. No attachment to money while trading small and simple is the key. Good trading going forward.
F. Helmut Weymar of Commodities Corporation also had thought that being right was all the pieces to the puzzle until his bet on corn (1971) reduced the firms trading capital from $2.5 million to $900k. It was then he realized that besides being right on the trade you need rules to protect you from yourself and the markets...