Fwd: Is being wrong really so bad? !!!
Arun Prasath
Is being wrong really so bad?
When trading
the markets, it's more common to be wrong than right. There are many ways to be
wrong. You can misread a chart pattern, since interpreting a chart is largely a
matter of subjective interpretation. You can falsely anticipate what the market
will do next, or you can simply commit too much capital to a trading strategy
that just may not pan out in the long run. Novice traders, in particular, are
infamous for needing to be right. This natural, human tendency is so powerful
that novice traders engage in unproductive trading behaviours to avoid
admitting that they are wrong. They might hold on to a losing trade, for
example, to keep losses on paper. They may procrastinate or put off making a
trade in an effort to avoid facing the consequences of a bad trading idea. In
many ways, a need to be right can be stifling. Rather than
feel free and creative, a trader who consciously or unconsciously needs to be right may hold back at
critical moments of trading. When you are inhibited
and afraid, you avoid making trades. And unless you make trades in a variety of
market conditions, you'll never hone your trading skills and master the
markets. To trade like a master, it is vital to
stay calm, open, and ready to trade with a winning edge.
Is being wrong really so bad? Many
people have trouble admitting they are wrong. It can be difficult to admit we
are wrong. It hurts. We tend to place great psychological significance on
negative feedback. For example, when we are wrong, it is as if parents or
teachers are criticizing us for doing something morally wrong. But this is a false
assumption. When we are wrong, or make a mistake, we are
not doing anything morally wrong. We are just being human. We all make mistakes and it is vital
to take setbacks in stride. If you can learn to downplay
the emotional significance of being wrong, you will feel calmer and can trade more
freely and creatively.
Another reason we hate being wrong is that we have
an irrational need to be perfect. We often assume
that unless we are always right, we will not be successful. This is especially
true when trading. Every dollar we lose may often require the effort of making
two dollars to make up the difference. It's natural to want to be perfect and
never lose. But we don't always need to be right. If you make small practice
trades, for example, you can make a trade, learn from your mistakes, and
make a new trade. Over time, you'll hone your trading skills. Since risk is
managed, you can make mistakes and learn from them. There's nothing to fear.
There's no reason to kick you for making a
mistake. You're human. You are allowed to be wrong. Don't
be afraid to accept your limitations. If you
allow yourself to be wrong, you will allow yourself to trade
more freely, and over time, you'll hone your trading skills to the point
that you will trade the markets skilfully and profitably.
Arun