Life (trading) Parable: A woman moved to India to study with a guru in order to know everything in the universe. The guru supplied her with stacks of books and left her alone so she could study.
Every morning, the guru returned to the cave to monitor the woman’s progress. In his hand, he carried a heavy wooden cane.
Each morning, he asked her the same question: “Have you learned everything there is to know yet?” Each morning, her answer was the same. “No,” she said, “I haven’t.” The guru would then strike her over the head with his cane.
This scenario repeated itself for months. One day the guru entered the cave, asked the same question, heard the same answer, and raised his cane to hit her in the same way, but the woman grabbed the cane from the guru, stopping his assault in midair.
Relieved to end the daily batterings but fearing reprisal, the woman looked up at the guru. To her surprise, the guru smiled. “Congratulations,” he said, “you have graduated. You now know everything you need to know.”
“How’s that?” the woman asked.
“You have learned that you will never learn everything there is to know,” he replied. “And you have learned how to stop the pain.”
As traders, one of the most important lessons you can ever learn is how to stop the pain. Go to a Casino and sit at a Blackjack table long enough and you will eventually hear a sad story about a losing player that keeps coming back. He boldly says that “the casino has been built on money that was won from me,” as if that is a badge of honor. Clearly this man did not know how to make the pain stop.
When a trade is going against you, you have options. You can immediately start reducing size or you can take the trade off. You do not have to sit there and watch money leave your account. You don’t even have to trade later in the day or even the next day. There will be opportunities next week or next month. Learning to stop the pain is indeed an invaluable lesson. Patience is of course a virtue.
As traders, we have to accept that we cannot know everything. We cannot follow every single stock. We cannot beat ourselves up for not buying the hot IPO that just won’t stop going up (thanks GPRO, you are giving traders serious regret ;] ). We lie to ourselves, “I knew I should have bought that!” We cannot take advantage of every opportunity. We cannot sell the tops and buy the bottoms with consistency. We cannot know everything about trading. Face it.
GPRO: Causing Traders Regret since 2014
I’ve read over 100 trading books. I cannot estimate how many scholarly papers and news articles I’ve read but I’m way up there too. I’ve interacted with other traders on social media. I’ve worked for a mutual fund and hedge fund. And guess what… I will never discover the holy grail of trading. I will never “perfect” this craft. I need to be okay with that if I am to be successful and happy trading.
Many of us traders love the pursuit. It’s fun to wake up and try to be 1 percent better than we were yesterday. It’s what man has always done. It’s fantastic we found something to keep us engaged and mentally stimulated. It’s fascinating to study the market from all the different perspectives. But in the end we need to be humble to the markets. We need to respect the money, the process and not break our own rules. If we can do this over a long enough period of time the success will come.