Being wrong is something that makes most people feel uncomfortable. Being wrong is not something that most people wish to admit to or acknowledge. For traders this need to be right can become an obsession and they refuse to admit to any perceived fallibility.
However is being wrong so bad? Doesn’t being wrong provide some help in becoming better at getting it right? Certainly experienced traders have learned that admitting to mistakes and then using them to learn is essential to improve their trading. Only this way can you presume to start mastering the markets.
As one trader noted, honesty is the key and the essential element for successful trading isn’t so much being right as there are many shades of right, but the risk management that you put in place. The successful trader is the one who goes for the trade where the odds are more stacked in their favor and then works to the plan.
If you fear being wrong then this can create hesitation or prevent suitable management of the trade if it goes against you due to the inability to admit that it went wrong. The fact is that if success is built around strategy and risk management, then the focus needs to be trading the probabilities to end up ahead.
This is where the difference is notable between the novice trader who stalls when setbacks hit them versus the experienced trader who knows that this will happen and that the real key is to keep going.
But the problem is that a poor outcome indicates that you got it wrong and being wrong is an unpleasant feeling. For the trader obviously the bad part is that being wrong brings with it losses and for the novice this is a double whammy.
The ego and the bank balance hit at the same time. It can start to feel personal or it is easy to turn it into a statement of self and assessment of one’s skills. The fact is that one needs to change it into acknowledging that if you’re playing the odds, then there is a certainty that you will get it wrong sometimes.
So in order to keep the perspective and keep going as a trader what do you do? You need to get straight back into the markets with the next opportunity but how do you help yourself to avoid the failures?
Well first and foremost you need to trade, trade and trade some more. You need to go through the wins but more importantly the losses and setbacks. You need to front being wrong and having the trades go against you and be in a position to learn that being wrong and facing some failed trades is not so bad.
When your ego and self requires you to always be right, there is without a doubt going to be many uncomfortable moments. But again, the fact is that you are going to get it wrong sometimes, everyone does, so remind yourself of that as you look for opportunities, execute a trade, watch the trade and exit again. Constant acknowledgement should help you avoid the risk of freezing and being worried at the idea of committing to a trade that could go wrong.
Create within yourself the ability to relax and you will find that being relaxed brings clearer thinking and an ability to review where the last trade went wrong and make appropriate adjustments in the future.
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