Recognizing a Mistake
| Aug 16, 2010 Recognizing a Mistake
Most new traders consider any trade that loses money to be a mistake. Similarly, any winning trade is deemed to be a good trade. I hope it's obvious hat this cannot be the right way to look at investing and trading. Part of the time, ideas which really are very attractive and which have a high probability of occurring simply don't pan out. Long shots win races and unlikely events occur in the marketplace. So, if you are going to learn from making mistakes, it necessary to recognize a mistake when you see one. This may sound trivial, but it's one good reason for keeping careful records of your trades. I'm sure no one consciously makes a mistakes, but when looking back after the fact, you may see why the trade was poor. Perhaps the risk/reward ratio violated your investment plans. Perhaps earning growth wasn't there, but you assumed the company would result its previous stellar record. One has to have some very solid reasons for making that assumption. A mistake can be as simple as investing too much money in a trade just because you have a hunch. When the trade makes or loses money, that's a mistake. Doubling the size of a new trade in an effort to recoup losses from a previous trade is a big mistake. Trades must stand on their own and not be used to 'get even.' The bottom line is that you want to examine your trades and the decisions that go into making them. If you discover doing something inappropriate for you and /or your club, then that's a mistake worth discussing with the hope of learning not to do it again. Mark D Wolfinger Expiring Monthly: The Option Traders Journal http://www.expiringmonthly.com/ |
Mark D Wolfinger wrote:
> Aug 16, 2010
>
> Recognizing a Mistake
>
> Most new traders consider any trade that loses money
> to be a mistake. Similarly, any winning trade is
> deemed to be a good trade. I hope it's obvious hat
> this cannot be the right way to look at investing and
> trading.
>
> Part of the time, ideas which really are very
> attractive and which have a high probability of
> occurring simply don't pan out. Long shots win races
> and unlikely events occur in the marketplace. So, if
> you are going to learn from making mistakes, it
> necessary to recognize a mistake when you see one.
>
> This may sound trivial, but it's one good reason for
> keeping careful records of your trades. I'm sure no
> one consciously makes a mistakes, but when looking
> back after the fact, you may see why the trade was
> poor. Perhaps the risk/reward ratio violated your
> investment plans. Perhaps earning growth wasn't
> there, but you assumed the company would result its
> previous stellar record. One has to have some very
> solid reasons for making that assumption.
>
> A mistake can be as simple as investing too much money
> in a trade just because you have a hunch. When the
> trade makes or loses money, that's a mistake.
> Doubling the size of a new trade in an effort to
> recoup losses from a previous trade is a big mistake.
> Trades must stand on their own and not be used to 'get
> even.'
>
> The bottom line is that you want to examine your
> trades and the decisions that go into making them. If
> you discover doing something inappropriate for you and
> /or your club, then that's a mistake worth discussing
> with the hope of learning not to do it again.
>
> Mark D Wolfinger
>
> Expiring Monthly: The Option Traders Journal
> http://www.expiringmonthly.com/
>
>
>
>
> Albeit a pet peeve, credibility drops with me when you haven't bothered to re-read or check for spelling errors.
>
>
>
>
>
>
>
> .
>
> Aug 16, 2010
>
> Recognizing a Mistake
>
> Most new traders consider any trade that loses money
> to be a mistake. Similarly, any winning trade is
> deemed to be a good trade. I hope it's obvious hat
> this cannot be the right way to look at investing and
> trading.
>
> Part of the time, ideas which really are very
> attractive and which have a high probability of
> occurring simply don't pan out. Long shots win races
> and unlikely events occur in the marketplace. So, if
> you are going to learn from making mistakes, it
> necessary to recognize a mistake when you see one.
>
> This may sound trivial, but it's one good reason for
> keeping careful records of your trades. I'm sure no
> one consciously makes a mistakes, but when looking
> back after the fact, you may see why the trade was
> poor. Perhaps the risk/reward ratio violated your
> investment plans. Perhaps earning growth wasn't
> there, but you assumed the company would result its
> previous stellar record. One has to have some very
> solid reasons for making that assumption.
>
> A mistake can be as simple as investing too much money
> in a trade just because you have a hunch. When the
> trade makes or loses money, that's a mistake.
> Doubling the size of a new trade in an effort to
> recoup losses from a previous trade is a big mistake.
> Trades must stand on their own and not be used to 'get
> even.'
>
> The bottom line is that you want to examine your
> trades and the decisions that go into making them. If
> you discover doing something inappropriate for you and
> /or your club, then that's a mistake worth discussing
> with the hope of learning not to do it again.
>
> Mark D Wolfinger
>
> Expiring Monthly: The Option Traders Journal
> http://www.expiringmonthly.com/
>
>
>
>
> Albeit a pet peeve, credibility drops with me when you haven't bothered to re-read or check for spelling errors.
>
>
>
>
>
>
>
> .
>