The same kind of selective memory that I needed when I was on the dating scene. I chose to ignore the bad experiences I’d had with certain girls, and I stayed in the game long enough to find the wife of my dreams.
It’s the same kind of selective memory needed on the golf course. That bad shot from a few holes ago needs to be suppressed for this next one across the water hazard. Otherwise, you’re toast.
Some traders never develop this skill, unfortunately. They cling to the past, unwilling and unable to let it go for the sake of making that next trade. Getting faked out of a good trade last week prevents them from taking a similar setup this week, afraid it will hurt their account once again, or worse, their ego.
They have a good memory, yes, but they’re not using it in a good way.
That’s no way to trade. Clinging to memories which don’t empower you is a form of recency bias, and it can really prove costly in this game.
The Petrified Don’t Profit
Take last week, for example. The downdraft in the market left many trying to step in and get long near what they thought was the low of the dip. They were early on Wednesday and Thursday. Those who threw in the towel never took a swing at it on Friday, which provided the best rally of the week with the morning gap fill and continued climb into positive territory.
Sound familiar to you? Is this starting to ring a bell?
In a recent conversation with my friend Charles Kirk, he was telling me about some newer traders he had been working with. His delight came not only from helping them discover more about trading, but also from their attitudes in taking trades during difficult market conditions. He mentioned how the newer traders see a setup and just go for it, rather than hesitate the way some experienced traders do who are dealing with recency bias.
Love is a Choice
Love is commonly described as a feeling, but true love is really a choice. It’s a commitment to look beyond one’s faults and accept the entire person. It’s a decision. Marriages which last 40, 50, or even 60 years are based on that decision, long after superficial beauty has faded.
Having a selective memory in your trading is also a decision. It takes commitment and practice to make it a routine, but it’s worth it. Expect the best from yourself, but along the way, know that you’re going to make some mistakes. There will be headfake moves which shake you out. They aren’t fun, but they don’t have to sideline you and damage your confidence forever.
Mistakes cost money, so they’re worth learning from. However, they can also cost us opportunity if we allow the memory of them to stand in the way of taking new trades which suit our plan and which offer great potential rewards.
Look for some mistakes you made this week, learn from them, and then choose to look beyond them so they don’t cost you any opportunity.
Trade Like a Bandit!
Swing Trading & Day Trading Service
Are you following me on Twitter yet?