Trading Teaches You How to Be Forgiving
Imagine this scenario: you run your scans, you eyeball yourcharts, and after several hours of intensive research you come up with what looks to be the best trade of the week.In fact, this chart is the best-looking chart you have seen in a long time. The markets have been choppy and tough to trade lately, but this setup looks like a surefire winner.So at the open you fire off your stop-limit order to enter the trade, and sure enough, half an hour later it executes.You are now long XYZ in size. It closes the first day with a 3 percent profit—not a bad start. It closes the second day at a 5 percent profit, and the third day at 7 percent. All is well, and you envision the trade hitting your 15 percent profit target by the end of next week. That evening, however,the company comes out with some bad news: earnings are not going to be as great as everyone expected and so the company is lowering its guidance figures by a considerable amount. The next day, the stock opens below your entry price and proceeds very quickly to trade down through your stop-loss. You are out of the trade with a loss.In a quick Wall Street minute your hopes have been dashed.How do you feel at this point? I’ll tell you how youfeel. You feel betrayed and resentful. The company’s management let you down. They are bumbling idiots. It’s all their fault! Or, if you are a neurotic like me, you will blame yourself. You should have done more research. You should have taken some profits while you had the chance. You should have seen that internal weakness in the chart. If only this, and if only that, you will say. Regret and shame color your mood.Now, those are perfectly understandable emotional responses to a disappointing experience. But are they the best way to respond to a trade gone bad? Of course not.Over time, those negative experiences (and at times they will come in large batches) will eventually drive you out of the trading game if you can’t get a handle on them. This is precisely what trading teaches us to do: in order to get beyond the blame game or the “woe is me” game, we need to learn the art of forgiveness. Forgive the company for mishandling a bad quarter. Forgive the chart for not drawing your attention more strongly to that hidden pocket of weakness. Forgive yourself for not being diligent enough,or prescient enough, or whatever enough. Forgive and forget and move on to the next trade. It is an essential lesson to learn in life—to forgive the mistakes of others as well as your own—and it is an essential lesson to learn in the process of trading for life.
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