Friday, October 8, 2010

The Daily Note - Lost Innocence

There is a great song by Esther O'Connor "Lost Innocence" that makes for a perfect study for traders.

Most start this business of trading in all innocence, wide eyed to all great possibilities until the day comes when we come to know that not every trade is easy nor is every day, and markets can betray us like a lover. How we handle that "lost innocence" can make or break our future as a trader.

"What you can never ever replace is written on your face"
Were you surprised by that unexpected loss? Were you prepared for its possibility?
"When they ask you where you're going and you no longer know"
Was a possible loss planned in your strategy? If not, you will feel lost, not knowing what to do.
"When the way ahead is changed in a twinkling of a night"
Always plan for a loss with a stop so a major loss is avoided. Once planned think of what possible trades you can do in its stead if it happens.
"And all that you rely on is gone out of sight"
Your original strategy did not work and now you can do plan B if you have one. You can flip the trade if it's strongly against you, or recalculate for a better entry.

"Loss of innocence there's a time when losing wins, When it makes no sense"
Yes, trades can happen just that way and we have to face the fact that we can't know everything; realize we can't control everything. But you'll turn each loss into a win if you commit to keep studying and learning from them. Rather than a deer caught in headlights, the loss is a great lesson for your next plan, so look at it as a win and include it into your next trade.

"And nothing is the way you choose."
We cannot have everything the way we choose. Life would be boring and beautiful songs about it would not be written. So, celebrate your "Loss of innocence" each time it happens because in trading, as in life, "When at the end is where you begin".

Happy Trading, Living and Dancing

The Daily Pick - BIDU

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