I oft remind myself, and my trading group, about "The Colors of Trading" especially during times like this when it is so tempting to search for that market bottom. The problem is not that one takes a calculated risk; the problem arises when one tries to prove themselves to be correct. The temptation to stick with a trade on the wrong side is ego driven which can lead to ignoring stops. Of course it usually ends in bleeding.
Equally ego driven is the "perfect exit" at the max as if that extra penny or two will make a new record of profits gained. Well maybe, but that can lead to tears while waiting for that penny; gains are washed down the drain as the trade turns but the hope for a new high/low does not.
So if you can identify with these scenarios, next time remember "The Colors of Trading":
There is only one shade of green. Which means profit is profit not matter how much, if you can take it to the bank, it's a successful trade.
On the other hand,
There are two shades of red: "Pink and Blood". Realize that being stopped out of a trade means you limited your loss to a tolerated level, therefore the loss is pink with a only tinge of blood. Yet if you ignore your stops or don't use one at all, your trade can bleed you death."Pink" losses allow you to trade again, but "Blood" losses may stop you from trading all together. So don't discount the discipline and the control of your own trading destiny.
Happy Trading, Living and Dancing
Today's Single Note: RIG
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