It’s odd isn’t it? Something that is so well documented and almost expected, can be so shocking when it does happen and upon further analysis.
Take for example people’s trading patterns. After a break from trading and a fresh start, we start again with very clear staking sizes, and we stick to them. We make 5% here, 6% here and are trudging along very nicely, just as it should be. Then we take a loss, which is to be expected, so we do not panic. Then slowly and sometimes subtly (sometimes not) we start to over step our staking, refusing to accept losses when they do appear, even though we know nothing is more inevitable.
I have read many a blog post describing this odd behaviour, with the author often baffled by his irrational actions.
There is an enormously similar phenomenon in tennis, especially WTA. I am currently watching Radwanska v Lepchenko and another example, of one player dominating, only to crumble at that all important moment. The underdog served for the 1st set, threw in a shocker of a game, when her serve had been firing on all cylinders, and she must be asking herself what the hell has happened.
The most crucial thing when this behaviour creeps in to trading, is to step back and realize that even a large loss due to careless gambling can be negated by a few successful trades.
There will be many people who have achieved short term success in trading. The difference between those people and those who make it work long term is taking losses on the chin and sticking to what’s been working for you, ie your edge.
