The market can stay irrational longer than you can stay solvent.
This quote by economist John Maynard Keynes highlights the importance of managing risk in trading and investing, as market trends can often defy expectations and last for extended periods of time. It serves as a reminder to traders and investors to have a sound risk management strategy in place.
Reflections
My Success In Trading
I’ve been a trader for 17+ years. I’ve been able to survive and thrive in the market for all these years, not because of my superior predictive skills, but because of my superior risk control skills.
I’ve learned to never over-leverage my positions and to always (always!) have a solid exit strategy in place. By being mindful of the potential risks, and by embracing uncertainty, I’ve been able to weather market downturns and capitalize on opportunities when they arise. Approaching risk in such a way has allowed me to stay in the game and enjoy a rather successful run in the market.
Trading is not about being right all the time, but about being smart with your risk management. This can’t be said enough. This is key to my long term success in trading.
Even if you can’t yet fully grasp the importance of what I’m sharing here, my hope is that you at least trade in a way that keeps you in the game. In due time, you will internalize the lessons. Be patient with yourself and the learning process.