Jul

29

"If you aren't in over your head, how do you know how tall you are?" -T.S. Eliot

"Many people never connect with their real talents and fail to attain their potential because they don't push what they do to excess" -Rod Junkins in "The Art of Creative Thinking".

Though it is quite prudent to compromise and maybe aspire for a success which is realistically feasible, failure proof, and safe, risk and loss aversion do not allow you to fully achieve your potential. Each time you grab the crumbs that market banqueters leave under the table.

The emini yesterday moved steadily down gradually forcing dip buyers to give in and therefore driving prices even lower in a 4 consecutive down days streak, which occurred last time at the end of March. Mean reversion would start at some point and it would likely be triggered at some point approaching the close of the last day of the week.

I counted previous similar situations and 90% of the time, prices moved up from 1500 to the close with a stunning profit factor and a reasonable number of events. Eventually the trade ended up with a very amateurish scalp that brought very little improvement to the P&L as prices moved up 9 points during the last hour of trading. (I have a good excuse as I was at home with screaming and fighting kids around me).

You should always have a feeling of respect for any amount of money made. However you must fully exploit your edge in a highly competitive environment where the most brilliant (and sometimes evil) minds fight for their share of profit.

You must be aware that the day you have a loss you might return most of the meager profits made over past several weeks. The day your edge starts fading you might give back a great deal of the profits made by the time you realize that the approach followed is not working any more.

Pushing your limits allows you to know yourself and understand who you really are. It allows you to measure your value as a fighter. Champions in all sports, heroes in all fields of combat situations are those who push to the limit their obsession for planning and training. Strong with their conviction and self confidence built on thousands of hours of hard work, they face situations with boldness and courage in order to win a decisive victory over the adversary. Not just a win on points in case of boxing, but a knock out.

We all know, however, that though this method may lead to the most outstanding victories, such a full "risk on" approach also leads to dramatic falls and defeats. History is full of episodes of great personages that relied too much on their ego and we should also not underestimate the importance of luck.

One thing is for sure. You need to give yourself an opportunity to succeed, to emerge, to realize your potential. Otherwise you will continue to drift without the ability to stay the course or, at best, to be a below par trader. But this is not only about trading. It is about the way you live your life, it is about who you really are. We have a duty with respect to ourselves, which is to do our best in our life to fulfill our talents.


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