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Winners Trade to Win

  
  Education
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As you already know, I am not a slave to conventional wisdom. It is my belief that most popular beliefs held by the masses are not wise at all. This applies to all walks of life, not just the stock market.

The latest bit of unwise conventional wisdom is the idea that one must “focus on not losing money in order to make money”. Play it safe and protect your capital has been a popular mantra over the past month. What a load of crap.

You know what happens when you focus on not losing money? You lose it. Either that or you make meager gains (all hail consistency, as in consistently average!). It’s akin to an athlete playing not to get injured. That is when you get hurt. The team that plays not to lose rarely wins.

In trading, playing not to lose will cause you to pass up on good trades and scare you out of trading volatile, yet lucrative markets. If you have put in the blood, sweat and tears that accompany hard work and dedication, know what you are doing, and have a sound methodology and edge, don’t ever play not to lose.

Note that this doesn’t mean you throw caution to the wind. On the contrary, a trader must be vigilant about managing risk, position size and ones emotions. These three factors, along with having an edge, allow one to play to win, rather than lose, and put on winning trades.

There is No Such Thing as Information Overload

  
  Education
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The information dietJust as too much junk food can lead to obesity, too much information can lead to stupidity.

Clay Johnson’s book, The Information Diet, shows you how to thrive in this information glut, but you must accept that there is no such thing as information overload.

Once we begin to accept that information technology is neutral and cannot possibly rewire our brains without our consent or cooperation, something else becomes really clear: there’s no such thing as information overload.

It’s the best “first world problem” there is. “Oh, my inbox is so full,” or “I just can’t keep up with all the tweets and status updates and emails” are common utterances of the digital elite. Though we constantly complain of it—of all the news, and emails, and status updates, and tweets, and the television shows that we feel compelled to watch—the truth is that information is not requiring you to consume it. It can’t: information is no more autonomous than fried chicken, and it has no ability to force you to do anything as long as you are aware of how it affects you. There has always been more human knowledge and experience than any one human could absorb. It’s not the total amount of information, but your information habit that is pushing you to whatever extreme you find uncomfortable. (more…)

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