Fail Expertly

• Posted by chicagosean
• on June 2nd, 2012

In trading, I’ve become an expert in failure. My goal is to become better at failing expertly. This is a subtle difference that means everything.

I’m currently an expert in failure due to the fact I’ve committed - at one point or another – nearly every possible trading sin one can dream up. You know the usual suspects:

• over-trading
• too much leverage
• under capitalization
• not adhering to stops
• trading without a plan
• paying short thrift to proper execution
• assuming too much risk, not respecting it
• trading products I don’t fully understand
• competing where I have no edge
• becoming too emotional
• under-valuing the need for ample liquidity
• misaligning time-frames (the time a trade typically needs to play out, versus my expectation/need for it conclude)

Successful traders fail all the time. In fact, many even fail a majority of the time. The difference is that their failures are not a failure to execute their plan. The failure rests in the fact that the expertly chosen trade turned out to be wrong (nobody can be right 100% of the time – except Congress). And when the trade was wrong, they took their loss which resulted in minimal damage to their portfolio and moved on to the next opportunity.

I’m never going to join the Big Leagues if I can’t commit to failing expertly, and neither will you.

This is where my focus is now.

 

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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