Disappointment manifests itself in many different ways when trading or investing. It’s one of those psychological traits that must be overcome in order to move forward to achieve our longer term goals. Generally disappointment stems from having a preconceived expectation about what the future holds. In its simplest form it’s an expectation about a particular trade or scenario that doesn’t come to fruition. This can result in large losses when we hold off realizing a small loss whilst attempting to prove our expectations right.
Not realizing a loss is an attempt to delay disappointment.
Another type of disappointment is when a stock tags your stop loss and subsequently reverses and continues on its merry way with out you. We can create a theory that someone was out to target our stop, that the market is rigged. Complete garbage but it gives us an excuse to pass the blame and avoid disappointment.
Here is a trade from the Growth Portfolio that I, and many of our members, rode. You can see that not only did we get stopped at the absolute low of the dip, but the stock has almost made its way back to new highs.
Of course we can only realise this in hindsight. Had we known at the time that within a few weeks the stock would be higher we’d have held on, but we can never know what the future holds. We can only act on current information.
To deal with any disappointment you may feel with this scenario it’s imperative to understand that a single trade will not make or break you as a trader. Every trade is a single step toward allowing the law of large numbers and positive expectancy to do its thing. There will always be another opportunity to exploit our edge so long as we continue to follow the strategy over the longer term.
1. You cannot predict the future, nor change the past, but you can manage the present.
2. Next 1000 trades. A single trade will not make you or break you.
3. Have no expectations and endure no disappointment.
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