There is a frequently used quote in orthopedics that highlights a
very important general concept, “The enemy of a good result is the pursuit of a
better one.” Those few extra tweaks and
adjustments at the tail end of a successful knee replacement operation could
prove counterproductive, and just might result in the entire procedure failing.
Have you ever found thoughts such as these running through
your brain?
“I sold my position for a three-point gain, and naturally it
shot up another two. I must figure out
how to capture the remaining move from now on.
That’s $2000 in profit I left on the table!”
“My trading account rose 40% last year, but Trader X made
$125%. My goal next year is to beat him.”
“My trading has been so spot-on lately I’m going to use options
instead of stocks to juice up the return.”
“This trade is going exactly how I envisioned, and I’m up
15%! My target is now 2% away; too bad
the trading day is about to end… I think
I’ll hold this overnight. “
On a similar note, a concept called the Nirvana Fallacy is often observed in
trading circles. This line of thinking
is present on other blogs, but certainly not on the Slope!
“The Nirvana fallacy is the logical error of comparing
actual things with unrealistic, idealized alternatives. It can also refer to the tendency to assume
that there is a perfect solution to a particular problem. By creating a false dichotomy that presents
one choice which is obviously advantageous – while at the same time being
utterly implausible – a person using the nirvana fallacy can attack any
opposing idea because it is imperfect.”
We all deal with flawed systems. We all screw up, bite the bullet, screw the
pooch, and get taken to the cleaners periodically. We all have great trades, feel like a champ,
and perform admirably in stretches. The only difference between us is the magnitude
and frequency of our victories and failures.
Beware of pie in the sky statements from others, especially if they are selling something or pushing an agenda.
Happy trading, everyone!
