Sunday, May 3, 2020

Being wrong never felt so good

I knew something was up. Trade after trade, nothing but loss after loss. I'd buy at the perfect top, sell at nearly the perfect bottom. Nothing was going right. Then my statistical antenna went up. Holy crap, I've been perfectly wrong. In other words, my signals were legit--not random. Legitimately wrong, but legit! 

These were the thoughts that went through my mind in a bout of recent trades, where even changing the security resulted in the same outcome - being a near-perfect inverse indicator to the respective position I took. But nothing could have been so satisfying as what came out of this realization. We all pay our tuition to Mr. Market, and in this case, it seems to be a tuition well payed for the insights gleaned. 

What do you do when you realize you're completely wrong? Well, do the opposite! And that's what I did. Putting aside both my ego and the need to be proven right, I took a step back, essentially traded the inverse of the patterns and practices that cost me money, and magically saw my equity curve reverse. 

This was a significant enough moment to make it my first post of 2020. My breakout trading month of mid-March to mid-April was not even enough to start a post. In my mind, I couldn't trust my results without confirmation through multiple months of consistent returns, and with good reason. My recent inverse indicator status proved that. Without going into the details of how I clawed out of my more recent losses and back into the green, the main point I wanted to make here is to closely monitor your outcomes for signs of simple bad decision-making that can be easily corrected by acknowledging that it's not the market, but YOU that is the problem! 

Peace.

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