Believe and Belief

We are Trade / Invest / Speculate base on our BELIEF(s). It is this BELIEF that we believe lead us to the next step of decision making.

Whether our decision is correct or otherwise will be dictated by market. Sometime immediately we are proven without the pain and agony of waiting and the timing is just right. Sometime the timing is JUST NOT RIGHT and it can take weeks, months before we are vindicated and in the meantime we endure the pain and agony.

Sometime we are immediately proven our decision is correct BUT we don't know our exit plan or we do not have exit plan. This can change and turn profit into losses. In such condition and situation the word HOPE and BELIEF come into play wrecking up the trade.

I have experienced situation that the Price NUMBER is correct BUT the market is NOT ready to change. In an uptrend the price can be pushed much higher than our expectation and beyond historical high and multiples.

Everyone in the market trade his or her beliefs. Some believe market trend will go up and some believe otherwise or down. In the end, the safest approach is to FOLLOW the trend and Act NOT on our BELIEF which can become a real liability.   

Ultimately the safest approach is to religiously FOLLOW the system irrespective of what we think and believe. A weekly system means we need to be able to immune to daily volatility and a daily system means we need to be immune to intraday volatility. 

The dilemma is what do we do with our open position when market goes against our BELIEF. If we hang on, it will be excruciating pain that no word can describe. To close the open positions, we also need a game plan to reinstate the EXITED positions when the trend begin to change per our initial belief.

If we are leveraging margin, a losing positions need to be remedied with additional fund. The trick is to reinstate NOT fully but some positions and add slowly when the trend has finally move in our favor and completely reinstate all at our earlier exit level.

This is the most logical way to manage losing position when WE are MENTALLY STUCK TO OUR BELIEFS.