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Right on AL!
Leo, because anything can happen in a trade, it is important to
build a methodology which caters to all possibilities. Building
this methodology seems to be a never-ending process unless you
keep it real simple.
To make a mistake, you have to fail in implementing your
methodology. So even if you take a loss, you have not made
a mistake if your methodology was to take that loss in order to
reduce your risk.
Every trade in which you apply your methodology correctly
is a good trade, regardless of the financial outcome. So the
real focus becomes building a profitable methodology, rather
than the stress of taking a loss in any particular trade.
-Neal.
At 02:34 PM 10/9/97 -0500, Al Taglavore wrote:
>Leo,
>
>I will inject my 2 cents worth of info to your post. You have answered
>part of your delima in that TRADING is not like most mistakes that are made
>in life. As such, if you use the logic that has made you successful in
>your particular field in life, this will usually guarantee you failure in
>trading. In life, you are taught to avoid risk. In TRADING, you are
>accepting risk. You are making a decision without having all of the facts.
> If you DO have all of the facts, the trade is over. To get a clear
>understanding of my comments, read Mark Douglas' book The Disciplined
>Trader, or read any of the works of Bob Koppel (The Inner Game of Trading,
>The Intuitive Trader). Any methodology will create a large number of
>mistakes. It is how you learn to control those mistakes. The STOP is your
>safety net. Using your example of the gasoline , if you had to pour gas on
>some material so that the material would ignite, you would pour the gas,
>then move the gasoline container so that if the fire you started got out of
>hand, you would not have an explosion. Good Trading.
>
>Al Taglavore
>
>----------
>> From: Leo Karl <leokarl@xxxxxxxxxxx>
>> To: Greatelto@xxxxxxx
>> Cc: metastock-list@xxxxxxxxxxxxx
>> Subject: Re: Trading....
>> Date: Thursday, October 09, 1997 1:56 PM
>>
>> Jerry,
>>
>> I appreciate your encouraging comments.
>>
>> What I have a particular problem with is not so much recognizing a bad
>> trade as "figuring out why" it was bad. That is, it seems to me trading
>> is unique in that the recurrence of MOST mistakes that we make in life
>> can be avoided by not repeating the same action. For example, you
>> probably wouldn't light a match around gasolene a second time. But if
>> you go long in a stock that subsequently drops severely, what was the
>> mistake that you could learn from? After all, sometimes they go up
>> under identical conditions.
>>
>> I'm sure you don't have the entire answer to this dilema, but maybe you
>> could throw some light on how you personally go about recognizing, then
>> learning from trading "mistakes".
>>
>> Thanks again.
>>
>> Leo
>>
>> Greatelto@xxxxxxx wrote:
>> >
>> > Leo said...."Your comments were exceedingly useful in illuminating some
>of my
>> > own shortcomings. That is, while I totally share your impatience, I
>> > have doubts about my ability to to truly *accept* my mistakes. It may
>> > be that you guys are better than I at differentiating having made a
>"bad
>> > trade", from viewing yourself as a "bad trader". That might sound
>> > simple to you, but those of us who sometimes can't make that
>distinction
>> > can find ourselves in deep grief."
>> >
>> > Leo, always remember, the "greatest trader" in the world will make a
>"bad
>> > trade" at some point in time. It was a business decision and he was
>wrong.
>> > What does he do? He figures out why, files it in his memory, takes a
>lick
>> > at the wound and goes on. In this business, nobody is perfect!! A
>loss is
>> > the cost of doing business....that's it.
>> >
>> > Jerry
>>
>
>
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