For The Hot-Headed Man
"Keep this thought handy when you feel a fit of rage coming on — it isn't manly to be enraged. Rather, gentleness and civility are more human, and therefore manlier. A real man doesn't give way to anger and discontent, and such a person has strength, courage, and endurance — unlike the angry and complaining. The nearer a man comes to a calm mind, the closer he is to strength."
—Marcus Aurelius, Meditations
So here we are on day one of month two already and todays meditation will probably resonate with a lot of you; well it did with me anyway!
I used to suffer from real anger and despair when trades went against me; especially when I had done all my research, only for the trade to quickly go wrong! My first reaction would be that I need to get back what I've just lost and fast! Revenge trading is probably one of the worst things you can do! Why you may ask? Well you've just lost some money, you're annoyed with yourself and feel that the market is against you and you are desperate to get it back! You will bump up your stakes and jump on trades that don't fully meet the criteria of your strategy; in fact you'll be heading for full tilt! A very quick way to the poor house!
The thing that made a massive difference and really helped me, was to put a rule in place that when I was trading the horses, I would never let the red become more than 5% of my liability. So for example if I was using a £400 fixed stake liability (my strategy is L2b), my maximum loss would be no more than £20. This is just an example of course and can be calculated to suit your own liability. With a £100 liability it would be no more than £5 and so forth. This was really beneficial to me, because I was now having the occasional small controlled red instead of a much bigger red, meaning that the anger and despair pretty much disappeared and this meant no revenge trading or going full tilt. £20 is much more recoverable in one, two or maybe three trades, depending on the odds and it made me much more relaxed and focused during a trading session. Revenge trading killed so many banks for me in my early days of trading so I learnt the hard way believe me!