Fear of the Swan

I'm just wondering how people manage their trading knowing that at some point a black swan event will occur. I'm thinking something along the lines of:

1) Live in a constant state of fear and trade as if a black swan event could occur at any moment.

2) Never give it a thought, since it would be impossible to predict anyway. And when/if it does occur you'll be screwed but there was nothing you could do about it anyway.

I was trying to think of some sort of middle ground approach, but I just can't think of one between total paranoia and total indifference. I personally think the latter is a better attitude, since you'd never be able to take a trade embracing the former.

 

You have to know the range of possibilities that can occur with your strategies.

Don't ever put yourself in a position where a big loss could make you destitute or affect your family's lifestyle.

If my account blew up tomorrow, I would still be equally poor. After that, it's all just performance numbers. Dollars are just my Government's currency.

 

Somewhere between the two.

Respect the swan, be mindful of the fact that the swan lurks...but don't let it own you.

 

If your constantly thinking that you may one day get caught in a Black Swan...then learn to ONLY trade options from the LONG side...then you will ALWAYS know your worst case scenario in a disaster!!!

 

And have contingency plans

Swans come in a multitude of forms


RN

 

Yea, I was kind of thinking that getting stopped out is a sort of mini-black swan. Because there's no reason to take a trade that isn't profitable. So, getting stopped out is something you didn't expect to happen.

 

Getting stopped out is a normal part of trading..., and no where near a swan event

Not even in the same universe

This is simply crazy thinking

Like you.., I.., or anyone - will ever know before hand - never happen

Nor is expecting a trade turning out profitable

=======================

You ever experience a black swan event - whether you survive it..., or not - you'll have no doubt it a black swan


RN

 

I understand the uncertainty part, I just don't know why you would take a trade knowing it was going to be a loser.

 

And a light breeze is a sort of mini hurricane.