I am constantly amazed at our capacity for hope. We are all vulnerable and we all fall for it somewhere. I challenge you to inspect all aspects of your life, if you think you are immune, and I bet you will find that there is a place where it applies to you. Therefore, the saying "hope for the best, prepare for the worst" is not bad advice overall, but will save only those who can see or define what the worst is. For most traders, and us romantics "worst" is covered up with hope and nothing is is very clear from that position; and that is why we fail to prepare for the worst in some aspect of our lives.
When you don't know what the worst is for you, you will not be able to save yourself from death. It's just that simple. I am speaking of death in the multiple sense here not the final one. Of course that too can happen to the totally unprepared.
As I said, hope is an eternal flame, burning, consuming and really tough to extinguish, which is good for our desires because it's what drives us to go on. Reality is what we face each day living in the moment and hope is somewhere down the line. In between there are many possibilities and that is why we must draw the line somewhere to keep our reality balanced. If we don't plan ahead, reality can be painful. On the other hand, if we balance too much on the worst side, we may miss out on reaching that hoped for goal. And that is the key which fits the other side of this lock.
We not only need to know what the "worst" is for us, but also what is the hoped for "goal". So a goal must be attached to hope for it to be reasonable. Without a goal, hope is like smoke; movable at the slightest of breeze and consequently never reachable. A goal is manageable, hope is not. So each time you think hopefully, see if you can attach a goal to that hope and it will help you find that elusive "worst" place also.
Happy Trading, Living and Dancing
The Daily Pick - TBA
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