Listening to sports talk radio this morning and I hear this "Las Vegas is built on the rule, not the aberration." Readers know I like the odds in my favor. Other traders may do fine with a relative low percentage of winners, and big winners. A common trading methodology is to aim for 1/3 winners, but make them big, and 2/3 losers keeping them small. My loss averse personality can't stick to and follow that kind of plan. As I often write, it is vital to find a trading style that fits your particular personality. For novice traders that's where journaling (like this blog) can be a powerful tool.
I lot of traders and investors think they are the aberration. Whether it means putting all their eggs into one basket, one asset class, or buying low percentage option plays, they are convinced that they will be that aberration that beats the odds. Yes, a few do beat the odds, but most do not, and that's how Vegas builds and supports those billion dollar casinos.
There is little point in arguing or trying to talk sense into someone that is sure they are the aberration. It is sometimes like trying to convert someone to another religion. That ain't going to happen with logic and sense. It will take more than that. If a person has the track record to back their belief, it is one thing. For others, it might be a lesson they have to learn on their own. Some never learn the lesson, and continually lose money in the latest and greatest aberration.
No comments:
Post a Comment