The cost of swinging for the fences.

A system is only going to produce so many winning signals. Of those signals, some are going to be “home runs”. The key to hitting a home run is to put yourself in a position to swing for the fences.

There are two situations in which swinging for the fences is an acceptable risk. If you always swing for the fences or if it is harder not to swing for the fences.

If you are randomly swinging for the fences you are doing so risking that single or double or triple.  You are giving up a chance at a winning trade for a chance at a bigger winning trade.  Once you have experience, the risks are less.  I say that because you have seen a situation and have some idea what each situation produces.

What I see many new traders do is that they get out of a trade only to see it continue in their direction.  They are angry and think that all trades are going to end up like that.  For one, you are almost always going to forget about the 10 times you swung and missed.   Your memory, when it comes to situational opportunity fucking sucks.  Secondly, you are creating a bad habit.  The purpose of seeing what a trades does after you are out of it is so you can learn.  It is not for validation or closure.  It is to learn.

If you are always going to swing for the fences be prepared to have deep pockets.  It takes many trades to make the math work out.

If you are randomly swinging for the fences chances are you need to work on your understanding of risk.

Only hitting singles does not necessarily mean you are going to be profitable either that has its risk as well.

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