It's Not About Being Right
The biggest ailment facing many traders is the need to be right. Most people hate being wrong. They hate being wrong so much that they lie to themselves about being wrong and refuse to acknowledge that they are infallible. But seasoned traders know that if you are obsessed with being right, you will never be honest enough with yourself to hone your trading skills to the point that you master the markets. In an interview with Innerworth staff, Bo warns, "You have to be able to be honest with yourself about what you're doing. In many areas of life, it is important to be right. In the markets, it's not about being right. It's about managing risk and making sure the odds are stacked in your favor. If being wrong about a trade hurts you personally, then you're never going to make it as a trader. You can't let errors faze you. You just can't care. It's a little bit like rolling a die. You never quite know whether the next trade is going to be a winner or a loser. But if you stick t o your plan and remain disciplined through a series of trades, more likely than
not, you'll be in the plus column."
The difference between the master trader and the novice is that the novice trader is thrown off his or her game by repeated setbacks, while the master trader just brushes off mistakes and keeps going. Being wrong can hurt. It often feels like we are being punished for being a poor student, a bad child, or an unproductive worker. If you are not careful, you can imbue being wrong with too much personal significance. It can have symbolic meaning. The trick, however, is to remove the symbolism, and neutralize the emotions to the point where you just say, "So what, of course I'm wrong. That's what I expected. I'll just get over it and move on." When you are wrong and make a mistake, you need to get back in the game as soon as possible and try to turn things around. That's often easier said than done, though, especially when you have a lot on the line. But there's a lot you can do psychologically to set yourself up for success and avoid failure.
The first thing you need to do is make trades, experience being wrong and see that being wrong is not so bad. The more you face the unpleasant reality of being wrong, the more you will see that being imperfect is not so bad. If you believe that you must be absolutely right and can never be wrong, however, you'll feel ill at ease. And then, you'll be afraid to be wrong, feel stressed out, make trading errors and lose. But if you remind yourself that trading is hard, and you are likely to be wrong, you will feel better. You'll think, "Of course I was wrong. Trades don't work out a lot of the time. I'll just take it in stride." With a more flexible state of mind, you'll feel more relaxed, and take precautions to protect your ego and your assets. Ironically, if you just accept that you may be wrong at times, and that being wrong is not so bad, you will be able to relax and recover easily from a setback. And if you feel relaxed and keep trading, you'll hit upon a winning streak an d trade profitably. On the other hand, though, if you think you must be right and that losses are a terrible tragedy, you'll never feel at ease. You'll always feel you're about to take a fall and be unable to get up. In the end, the more you are not afraid of being wrong, and expect to make mistakes, the more you will persist. And the more you persist, the more profits you will make in the long run.
