There is an entertaining story that George Foreman tells about his battle with Ali, and there was a point where Ali said, “Is that all you got?” and, at that moment, Foreman realized it was all that he had.
I find when I trade too aggressively and miss my targets or oversize trades that I sometimes get myself in a similar situation. I have noticed if I find myself in a trade that I did not take off at a profit and that is not working and thinking to the side that I’m trading with, “Is that all you got?”. The answer is often a yes– at least in that moment and context. It feels good to predict the market and win but when we get wrong sided then sometimes we may wish the market behave more favorably random.
One lesson might be not to trade so aggressively and that is often true in hindsight. But, the other more universal lesson deals with the need to guard against a “must win” at any costs attitude. Think about it, is a trade worth winning at any costs? If a trade isn’t profitable on a probability basis or an exceptional opportunity then it can surely be passed up. A trader’s primary strength is agility. Historically, one of the reasons I get myself into these trades is to guard against getting myself into the wrong trade. But, the right trade at the wrong time can be just as costly as getting wrong sided.
The author is passionate about markets. He has developed top ranked futures strategies. His core focus is (1) applying machine learning and developing systematic strategies, and (2) solving the toughest problems of discretionary trading by applying quantitative tools, machine learning, and performance discipline. You can contact the author at email@example.com.
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