The Trading Game: When Less Information Is More

2016-01-14 | John Carter

How much time have you spent in front of your computer, searching for the latest news on the markets? Combing through directories, trolling twitter, asking questions … all in search of the answer to the soul-consuming question. Why?

Why is the market doing this? Why is AAPL off its highs? Why did FB just drop $1.50? What is the latest news on NFLX, which will tell us WHY the stock should rally into earnings? What is the latest news on oil, which will tell us WHY it is going down and WHEN it is going to bottom?

Just as Yoda said, “Do, or do not, there is no try.” What I’ve learned over the decades of doing this is, “Your trade is working, or it’s not, there is no why.”

The moment we start to look for reasons why a trade is or isn’t working, is the moment we purchase a one way ticket to fantasy land. It’s the moment where we stop taking responsibility for our actions, and look for other people to blame, or other reasons to hope, outside of ourselves.

Price is price. If it is going in your favor, manage the trade and ring the register. If it is not working as planned, get out. Don’t cry. And don’t ask why.