Friday, December 02, 2011

Thoughts on Investing from Crosshairs Trader

Thoughts on Investing--from the Crosshairs Trader

A young lady confidently walked around the room with a raised glass of water while leading and explaining stress management to an audience. Everyone just knew she was going to ask the oft repeated question, ‘half empty or half full?’ But she fooled them all…

“How heavy is this glass of water?” she inquired with a smile.

Answers called out ranged from 8 oz. to 20 oz.
She replied, “The absolute weight doesn’t matter. It depends on how long I hold it. If I hold it for a minute, that’s not a problem. If I hold it for an hour, I’ll have an ache in my right arm. If I hold it for a day, you’ll have to call an ambulance.

In each case it’s the same weight, but the longer I hold it, the heavier it becomes.” She continued, “and that’s the way it is with stress. If we carry our burdens all the time sooner or later, as the burden becomes increasingly heavy, we won’t be able to carry on.”

“As with the glass of water, you have to put it down for a while and rest before holding it again.

When we’re refreshed, we can carry on with the burden – holding stress longer and better each time practiced. So, as early in the evening as you can, put all your burdens down. Don’t carry them through the evening and into the night… pick them up tomorrow. Whatever burdens you’re carrying now, let them down for a moment. Relax, pick them up later after you’ve rested. Life is short.”

Traders not only carry positions overnight but can also carry the worry burden of those positions. When that happens we have a tendency to allow the worry to dictate our subsequent action. But if we truly believe we will follow our strategy and trust ourselves to do the right thing when in a losing position, I am certain the worry burden can be greatly reduced or even eliminated.

Knowing that the weight of a losing position will get heavier the longer we worry over it should cause us to pause and ask…”Is it worth it to hold a loser when it is really time to let it go?”

Holding a loser that we know we should exit RIGHT NOW will not only worry us but will keep us from seeing other potentially profitable trades.

Then we are not only worried but frustrated as well. So, it is a loss/loss proposition.