Never Assume
If trading has taught me one thing it is the principle to
never assume
How many wars have been started due to misunderstandings (=wrong assumptions)
How much pain has been endured due to a wrongful accusation or otherwise misinterpretation; again nothing else but a wrong assumption.
Good listening skills and improved communication certainly helps the case, but to be honest, to hold the principle itself in mind:
never assume
provides the best "protection."
In trading this principle is magnified.
We do not have a sense for probabilities and as such giving weight to an individual bet as foolish as it is from a principle perspective is a mistake we engage in over and over again.
The ego wants to be right.
In terms of the election if you have your mind set to a high probability for Trump to be the next president, you certainly have the odds in your favor.
If you argue that as a backup plan strong forces will make sure anyhow that he will come out strong even if they have to make sure of it, than as much as i am not a conspiracy theorist you might still get my vote of this being a possibility, since this would not be the first nor the last election that can be rigged.
Yet all of these mind twists are coulda shoulda woulda, since there is never a guarantee
People can revolt, something could happen to Trump, news could print that the elections were rigged, any and all kind of c=uncertainties could come into play.
What is of a more likely scenario is, that if surprises like this would happen at the same time they would be very much magnified in their interpretation.
Meaning six sigma events have a higher likelihood in times like these than otherwise.
Even small stuff like peer pressure of traders and investors within corporate environments disbalance emotional stabilities and can get caught of guard if expected scenarios turn out otherwise or are disturbed by unexpected additional events.
As individual traders we have the luxury to make up our mind in our favor of good risk control and adhere to such a discipline.
My recent appeal to trade frequency reduction, exposure of money minimization and smaller trade size is based on the above case i made, the principle of "never assume" and the fact that a 50% loss requires a 100% profit to only be back at break even.
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