http://www.theage.com.au/articles/2003/06/28/1056683947563.html Ron Barassi might well have been the most courageous player in the history of Australian football, and he answers the question with a quote from his original coach and mentor at Melbourne, 50 years ago. "Norm Smith used to say that courage is the mastery of fear and it's right," said Barassi this week. "If you're not scared, you don't need courage. You are conquering a fear. I think these people who say they don't have fear in the first place are probably idiots. The ones I admire are the ones who are conquering the fear." Barassi insists that courage is a relative concept. He also disagrees with the old-timers' feeling that players are not as courageous as they used to be. "The proportion of players with courage is higher than ever," he said. "The bar's been raised." Barassi says a little fear is not such a bad thing, a point he established over lunch many years ago with Sir Edmund Hillary, conqueror of Everest 50 years ago. "I asked him about fear and he said: 'Ron. There's no way I would go up there with a guy who's not scared. If he's scared, I know he'll be careful about it and not stupid with his risk-taking'."
I agree as I said: "Fear is only artefact of uncertainty. Anyone who won't fear uncertainty would be just foolish: nature has "invented" fear to protect us don't forget. " (http://www.elitetrader.com/vb/showthread.php?s=&postid=344880&highlight=fear#post344880)
If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.
..I post this with all due respect, as you so very often bring to this forum (circus?) an unsuspectedly relevant rubric (cherchez-le dedans votre dictionnaire anglais-francais!). Also, I know it gives you great pleasure to discourse with fools. I wish to make a case for cowardice in trading. Cowardice is a much maligned virtue. Evolutionarily, it obviously offers a selective edge, as those who fly rather than fight can always service the females of the species while the alpha male isn't looking. I attribute my thus far long life totally to cowardice. It has much to commend it. The vilest (and most pleasurable and profitable) deeds often are perpetrated by the most cowardly persons, but of course only at little risk to themselves. Which brings me to my point: cowardly trading is a style much to be desired. I suffer from extreme free-floating anxiety. The least little market wiggle makes me sweat and shake. I do not want to be brave and overcome my timidity, I want to make money without any fear. The solution is to trade mechanically with statistically based rules rigorously backtested and optimized. I find that I can eliminate the need for bravery under the conditions of a 50+% win rate, a 1.6:1 average win to average loss, and a drawdown of 5X the average loss. Such a conservative system design doesn't make much money, but it doesn't require nerves of steel to follow, either. Then all I have to do is screw up what little courage I have to anonymously and with impunity insult the experienced posters here.
You illustrate well. But as said Mark Twain "courage is resistance to fear, mastery of fear, not absence of fear." That's why it is truly courage sporting or trading rather than cowardise sporting or trading we are talking about. The coward will lie to himself (again see trading in the mirror thread) by telling himself "I have no fear. fear will pass through me" - especially if he has watched Dune - instead of pausing and confronting himself and ask: what are the reasons for this fear and above all what concrete action for that. Now from theory to practice there is a gap: it will not be done by magic. So you must act and for that you need concrete tools and methodology - like PDCA wheel and statistical from Shewart-Deming which only require basic statistical skills and above all understanding of the spirit of continious progress instead of big jump - and not only psy mantras (although they can be useful they are not enough - except if you have super spy power that I ignore ).
That is the true reason for trading within a framework or a mechanical system: it is less for performance than for risk control because statistics are generally valid only under supposedly same conditions. How can you suppose that it is under same conditions if you take decision erratically under emotions ? In term of Shewart and Deming parliance you cannot make any progress before stabilising the variance - volatility if you prefer - and when it is done then it is possible : you can work to reduce the variance and improve the mean (performance). Shewart and Deming have always been angry against exhortation of psy gurus consulting in industry. I see the same kind of gurus in trading like Elder who pretends in his book "trading for a living" that mechanical trading system cannot work.
This complements what I have already said: http://www.elitetrader.com/vb/showthread.php?s=&postid=344880&highlight=fear#post344880 "Fear is only artefact of uncertainty. Anyone who won't fear uncertainty would be just foolish: nature has "invented" fear to protect us don't forget. So when fear is here it means you DIDN'T WORK ENOUGH AND/OR ACQUIRE ENOUGH KNOWLEDGE. This is evident in Deming's philosophy in quality management domain : look at the process, study the statistics that is the only CONCRETE way to improve. Once again bla bla bla on just psychology is not enough. I have posted PDCA cycle of Deming in anoother thread with concrete tools to use but many people have gamblers mentality and don't want to commit themselves to study seriously."
...I am very distressed. I think we are agreeing about something, which is not good. I like your QC analogy to reducing variance in a process. IMO a coward in the markets need not find courage, he only need find a system of systems which reduces risk to a level which doesn't make him sweat, shake, and hyperventilate. This is a black humored parallel of the the Zen response to enlightenment, "Chop wood. Carry water." You found some degree of trading success, but you're still a coward. Best regards. - Mike