rss

"TRADING WISDOM: ADDICTION TO PERFECTION"

“One of the great evils of trading is false exactness…Trading is a fuzzy process and I mean fuzzy in the best sense of the word. That is, as in fuzzy logic, as in the willingness to accept the idea that things aren’t exactly quantifiable and to forge ahead anyway” –John Bollinger (creator of the Bollinger Bands)

 

 

Trading is not about perfection. It is about probability and progress. All charts, analyses (fundamental and technical) and trading plans are built on probabilities.

Why then, do so many traders strive for perfection? Why do so many traders miss trades, waiting for exactly the right entry and then beat up on themselves when it doesn’t come and the position runs away while they sit there scratching their heads and condemning themselves?


 

 

The answer lies in one of the cardinal sins of trading which is PERFECTIONISM.

Perfectionism can be a great help to people in many professions, but can be fatal to a trader. Perfectionists, always trying to find the Holy Grail of trading go from one service to another, from one system to another, looking for a way that they can be right all the time. YES! Now, I found it. It’s this trading room, or this service, or this indicator! Wait… something is wrong here. Not all of these trades are working and I have draw downs! How can it be that this particular method failed and I actually had to take a loss? Must be something wrong. I will try harder and look for an even better system, a more expensive service, a new and improved guru, some absolutely no-fail software so that I can have ONLY WINNING TRADES.

This is perfectionism in action. Not only does this type of irrational behavior and belief undermine and demoralize a trader, but it takes away all the enjoyment and fun of being in the markets. It leads to depression with depletion of psychic and physical energy, and leaves the perfectionist to confront his basic and overriding fear— fear of failure. In the extreme, it leads to physical and mental illness, including addiction to prescription drugs, alcohol, or illegal substances as well as other addictions. The pain of failure or the haunting fear of failure is simply overwhelming, and one turns to whatever works to medicate the pain. (more…)

Ramayana On Wealth

In Ramayana Guru Vashistha explains to Lord Rama that in this world, wealth is the most important thing. There is not much difference between a poor and a dead person . A wealthy person seeking after Dharma and prosperity will succeed at all cost but the poor person striving for prosperity will find it difficult to attain.
Sage Vyasa writes in Mahabharata, that through wealth one attains Dharma, Kama and Moksha. Even day to day life in this world is not possible without wealth in hand. Hence, the Artha is important for rest of the three, Dharma, Kama and Moksha.
 
The great economist Chanakya writes in his sutras that the root of human happiness lies in Dharma, and the root of Dharma is wealth and prosperity. The motive of any karma or action is the gain of wealth and prosperity which bestows dharma and Kama. Chanakya has also mentioned in his work that one who has wealth and prosperity has friends and relatives and only then he is considered as a man and he is able to live his life according to his wishes.