In the stock market or futures market or any trading/investing environment, if you find yourself hoping for a miracle then you know you are in trouble. Remember,
“hope is not a strategy”
Where the Money Goes
Rule 6, from the “Tao of Poker” by Larry W. Phillips, It’s important that a player starts seeing “staying too long on marginal hands” as where the money goes.
This is a rule for less experienced players, but even long-time players are guilty of this at times. And make no mistake, this is where the money goes. It’s where the actual leakage takes place. In fact, it’s a money “leak” of such proportions that it can bring down the entire rest of our game.
If this were a house and we were looking for thermal-heating leaks, it would be the equivalent of leaving the front door open.
A good deal of the money lost in poker games is lost when players continue past the point in a hand when they should be out. Yet they are still in, still hoping for a miracle, still “donating”.
Not only is this “where the money goes”, it is also where the winners get most of their money “from”.
Hoping for a Miracle
So how does this happen in trading? You put on the trade. You thought you had the perfect setup. Then the trade starts to go against you but you ignore it, thinking ‘I’ve got some time, it will work out’.
This all gets back to having a process, a methodology and following a plan. Nothing works all the time. And sometimes things will fail several times in a row.
It is not fun, to be sitting there, hoping for a miracle. As a matter of fact there is no worse feeling than being in that situation. So have a plan for that trade or investment. And follow your plan, even if it means you have to take a loss.
Take the loss. Try to keep them small. Then breathe and relax…you’ve lived to fight another day.
Brief Market Update
This is an abbreviated version of what I provide my Insider Members. In this video I look at the Nasdaq Composite, 3 key ETFs and 3 stocks: Nvidia (NVDA), Pulte Group (PHM) and Goldman Sachs (GS).