Admitting you are wrong.

Posted on February 11, 2011 by Eli Radke • 6 Comments

Admitting when you are wrong does not necessarily make you a better person. It does make you a better trader. You can’t hid from your losses. The longer you have thoughts or feelings that are positive about an action that produces a negative result the harder it is to change that behavior. Said another way, you never get caught the first time. I look at what happened with Tiger Woods or any celebrity that messes up and I have little doubt that if they did not get caught they would still be doing it. That is what makes the market different, it rarely rewards individuals for making bad decisions. If I do everything right I am not guaranteed to make money, it is because if I make a mistake I will have to pay for it. Maybe not in that trade but in terms of reinforcing behavior that eventually will cause me to lose money.

How not to handle losses.

I have told this story before but when I was going through a particular hard stretch earlier in my career I would be at my limit down by noon. Go home and sleep/drink wake up around 9 pm eat and then go back to bed. I thought my problems would somehow be solved if I ignored them. Not the case at all, as a rational person knows. I was obviously not in a rational state at that time. It turns out the problem was fixable. I was so miserable for no reason. One of the many times I have had to get out of my own head to get better. As it was said to me “the market introduces you to yourself”, you can own it or it can own you.

Something more important.

Trading is important to me but it does not define me. Part of the reason it was hard for me during that time is because I lost that perspective. I am also a son, brother, uncle, nephew, friend, and other things. Always remember when you are having a problem, more people love and care about you than you think and more people are having that same problem than you think.

Edited

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  • http://www.andrewmenaker.com Popdoctrader

    Nice post. A similar way to look at it is….Do not ‘become the trade’. That’s how I look at it. Reminding myself that I am not the trade often helps me let go of a bad trade faster and easier. The trade is a position in the market, it does not define us as a person. Its very easy to get overly attached to a trade and let it define one’s sense of self-worth, or define one’s status in the eyes of others.

    Andrew Menaker, PhD

    • http://blog.mytradingnet.com Eradke

      It is hard because when you are usually at your weakest you need to be the strongest. And often it is the first time we are there so hard to understand how and why we got there. Thanks for the comment, big fan of your work.

      • http://www.andrewmenaker.com Popdoctrader

        That is so very true about the difficulty of and the need to be strong when we are at a low point. In so many ways, trading is not only a reflection of who we are as a person, it also magnifies it. I go as far to say that our beliefs, expectations, and emotions act as a filter on our perception of the market, our filter projects a structure onto price action that forms the basis for trade entries and exits. So we don’t actually see the market itself, we see our projection. It is simply human nature to see things through our own personal filter.

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