When you’ve achieved a state of mind where you truly accept the risk, you won’t have the potential to define and interpret market information in painful ways. When you eliminate the potential to define market information in painful ways, you also eliminate the tendency to rationalize, hesitate, jump the gun, hope that the market will give you money, or hope that the market will save you from your inability to cut your losses.
~ Mark Douglas, Trading in the Zone
It’s been a while since I last read Trading in the Zone, and found it shameful that I didn’t have a copy on my bookshelf, so I recently ordered it from online bookseller Amazon (have you heard of them?)
Even though I’d read the book before (maybe twice?), when the book arrived at my doorstep, I eagerly tore open the package like a kid on Christmas morning. It felt new again. And as soon as I had a free moment, I snuggled into my favorite reading spot in the house and turned to page one.
The book grabbed me immediately (as I remembered it would). But the passage above on page 15 stopped me in my tracks and had me searching around the house for a yellow highlighter.
I talk (preach?) all the time about defining my risks. But have I given enough thought to truly accepting the risks? Yes, I know how much I’ll lose in my trades. But am I truly cool with that? Do I really understand what that means? Have a thought through the implications of how these defined risks affect my portfolio?
These questions will define my thoughts for the next 24 hours, or at least until I pick up the book again and get floored by another truth bomb.