No, this is not a religious post.
Last Friday night, I got stopped-out of my Dollar/Yen trade.
The whip-splash was so quick that the fill was at a greater loss than my stop-loss point. Ouch!
What’s worse than a loss? It’s discovering on Monday afternoon that the price action has swung back; and if I hadn’t cut-loss, my original position would now be in the money! Shssh!
Ah! But the Reflective Mind is able to calm the emotional heart:
“10 times you cut-loss, there will be 2 to 3 times where positions bounce roaring back. Now, don’t you dare say next time don’t cut-loss!
Don’t forget the 7 to 8 times where after cutting loss, you are so relieved that all you got is a paper cut - instead of a Japanese Yakuza finger cut!”
And yes, I’ve not forgotten my $40,000 Jurong Tech lesson – stocks can go to zero!
The Listening Mind nods in agreement. Focus on doing the right thing. We can’t control the outcome.
Just like we know of people who have gone to the right schools, got the right grades, went into the right company, got married to the “right” person; and at 40, discover the outcome is not what they have expected or wanted…
The “right” money management technique is not a 100% fool-proof solution. It’s like the house odds of a casino – but over the long term, if we adhere to it, we will come out on top.
Now why is the Listening Mind sniggering?
The Listening Mind can’t help but gave the Reflective Mind a gentle kick in the you know where (not the groin lah!):
“Friend, what were you doing Monday morning till afternoon when you noticed that, instead of the price going further against you, it is slowly recovering in your favour?”
The Reflective Mind thought about it for a while and smiled:
“Touche!”
I was right to cut-loss; but I let the greater than anticipated loss shake me out of my conviction (or lack of conviction to be precise).
On reflection, two things I can improve for the future:
1) Be more patient for a better entry price.
2) Focus on the here and now. Yesterday is gone; while tomorrow is unknown.
Singapore Man of Leisure (welcome to my blog; just google it!)
