I recently came across the YouTube Video of Al Pacino’s inspirational speech from Any Given Sunday… I’m sure many have already seen the movie, but thought it important enough to relay…
See, much like life, trading is a game of inches… It’s all the inches that stack up to create success. So many newer traders I know never quite get the point… They trade way to much size, trade way to often (putting on a trade, just to be in a trade, because they can’t sit on their hands - patiently - waiting for the right opportunity), and then take big losses, because they couldn’t admit the trade was wrong, they were wrong, or that they should have never been in the trade in the first place.
But trading is a game of inches. Patiently waiting for the right opportunity, and booking the inches…one after another. As gains stack up, traders will find more “wiggle room” in their accounts, and more confidence to hold for larger winners…
When showing the attached video to a young trader in Moscow, Russia earlier this evening, he commented, “But aren’t ‘inches’ sort of a contradiction to your theory of ‘little loss, little loss, little loss, huge win?’” Kirill’s question was certainly valid.
My reply, however, was this… “No, because small losses are the inches we need to book large wins, while also seeing a positive balance, when the wins roll in…”
There will be losses in both my - and your - trading… Losses are the only thing I can absolutely guarantee every trader will eventually see - for sure.
However, it’s how we handle the losses that separate winning from losing. Small losses are the inches we need to achieve victory over the long haul… Large losses are not positive inches; they are massive setbacks that not only crush spirits, but accounts as well.
For a few traders I talk to worldwide, they know I’ve thrown some massive Hail Mary’s this year in a few “if / then” option positions. While I have no doubt my options will succeed before their expirations in December 2011 and December 2012, I also remind myself daily that it is the inches that help win the game. Thus, while we can throw a few Hail Mary’s (as in the case of my option trades), while the Hail Mary’s are in the air, we must fight for inches on a daily basis.
Should the Hail Mary’s land… Great. If not, it’s the inches that win the game in the meantime.
Don’t forget, it’s about inches. Inches are the difference between winning and losing.
On a separate note, for the Russian traders out there, Volatility Illuminated will soon be available in Russian, with special new Foreword, new extra chapter and the new indicator “Super Volatility” by Kirill Melentiev included. I will update traders as soon as the Russian version of the book is available.
Lastly, Volatility Illuminated Two should be available soon… Both Steven and myself have put hundreds, if not thousands of hours of research into the new book… Stay tuned for updates as to the book’s progress.
Mark Whistler is the author of eight books. Long awaited Volatility Illuminated Two (with co-author Steven Tsai) is expected on shelves in the summer of 2011.