If there is one axiom that is rock solid true in the market, it is this: anything can happen. Coming to grips with this truth and still having the guts to enter trades requires a lion’s courage. That courage only comes about after repeated bouts in the ring.
The question is: do you really believe anything can happen? Could your trade crash immediately after you enter it? We like to pretend that it couldn’t happen, but it does, on occasion. Some traders get wiped out entirely on one trade gone bad. They never saw the other side of the trade, the black swan event, the impossible becoming possible. It happens every year to some traders, and there is no reason to believe it won’t happen again next year.
That’s what you must accept. Once you accept the fact that you may be dead wrong on your trade, your perceptions are in order. You will not overtrade your account. You will practice sound risk management of your capital. You will trade like you are a sound business person who maintains risk management while taking proportional risk as you access the markets probabilities at that time.
Someone is always on the other side of your trade. They see the opposite happening with the trade, or they wouldn’t be betting against you. Some, right now, see the market rallying into years’ end and beyond. Others see the bear market continuing well into next year. Anything can happen.
The reality is your next trade could explode into massive profits. You could make more money over the next 12 months then you have made over your lifetime. Amazon-like rivers of cash could flow your way in short order. You could bank tons of cash and buy everything you desire with plenty left over for whatever you choose. It happens every year to some traders, and there is no reason to believe it won’t happen again next year. Anything can happen.
Once you have the confidence in your trading expertise, know how to assess a trade, and know what is important and what isn’t for that trade, you can place a trade understanding that this is a probabilities game, not a guarantee on income. If you want guaranteed income, go to a regular job, and exchange your time for money. That’s what most people do. They make that trade everyday.
Trading is a unique business adventure. Everything is different than the normal world. None of the regular job rules apply, only the rules you make for yourself. The crash could come in seconds or the cash windfall could happen. Anything can happen.
Here’s to a profitable new year ahead!
Enuf said.