To think or not to think: the trader’s dilemma

In closing this lesson on trader psychology and discipline, I leave you with a little bit of controversy. In 1969, when I made my first futures trade, thinking and analysis were fashionable. The 1960s and 1970s were good times for thinkers, freethinkers, thought-provoking issues, civil disobedience, and analytical traders. Thinkers thought great thoughts about the future of our nation, our presence and purpose (if any) in Vietnam, domestic and international policy, racial issues, concerns about freedom and equality, and concern about the poor and the homeless.

Thinking prompted radical action by various political interest groups. Frequent and violent antiwar protests disrupted the social structures of our nation. Civil disobedience, draft card burnings, sit-ins, and student protests were the rule and not the exception. The fundamentals that moved stock and futures prices were studied closely. They were analyzed, scrutinized, and theorized. Computer analysis of the markets was a new and promising science. Thy “why” question was paramount in the minds of traders and investors.

Edsel trading

Do you remember the story of the Edsel? In what seemed to be a reasonable, logical, and very intelligent approach, Ford Motor designed the Edsel to please the consumer. They did so by attempting to include all the features that the public wanted in a vehicle. The end result was a car that failed miserably. The simple truth is that “too many cooks spoil the broth.”


There are literally thousands of things that a trader can do in the markets. Unfortunately, there are few winning choices and many losing ones. Obviously, our primary goal in creating success is to maximize the positives and minimize the negatives. There is no single answer to the resolution of this dilemma; rather there are several or even numerous answers. In addition, the answers vary from one trader to another as a function of their personality, individual limitations, market orientation, and available capital. What follows are some points to consider in your plan to find effective methods and systems that will dovetail with your individual abilities. In so doing, consider the following issues and suggested solutions.

Deep Thought: Friend or Foe?

What is deep thought to one trader is either a mere pittance to another trader or a totally worthless activity to yet another trader. There are no set standards, no guarantees, and no insurance policies that your efforts will yield profits. There is no firm correlation between the amount of thought and deliberation that goes into a trade and the outcome of that trade. In fact, if there is a correlation, then it is likely an inverse one. Less is often more in the markets. Simplicity is better than complexity.

Decisions made seemingly off the cuff by some traders are often more successful than decisions made by committees. Computers have totally revolutionized the decision-making process by doing our “thinking” for us. Once the computer has done the hard work there’s really nothing left to do but to take the prescribed action. If you are using a trading system of method that has proven its efficacy either by your actual experience with it or through historical back testing then any hesitation subsequent to the acquisition of the trades is hesitation that will surely lead to confusion, indecision, insecurity, ambivalence, and equivocation—none of which are constructive inputs in the formula for success.

Last word

I suggest that the failure to act on your system is the first indication that you have taken a wrong turn, which will eventually lead you down the road to ruin unless you change things.

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