Trading on Target: How to Cultivate a Winner's State of Mind

FOR TRADERS: THE COST OF PURSUING PERFECTION

Just as the Pied Piper demanded his payment, it is easy to see what four of the not-so-hidden costs of the pursuit of perfection might be by looking at Roy’s experience, as well as those of other traders who are stuck in the Perfection Trap:

1. Difficulty in taking action To demand perfect trades that do not generate losses means that a trader will hesitate each and every time he should be taking action based on the signals he gets from his system/methodology. Instead of perfect trades, this hesitation can lead to no trades or bad trades. The demands of perfection can progress from hesitation, to difficulty in taking action, to inability to take action, which means that trading stops altogether.

2. Loss of self-discipline Instead of increasing self-discipline, the pursuit of perfection will ultimately undermine self-discipline by putting unreasonable pressure on the individual trader to be perfect. At first, the pursuit of perfection may guide a trader to a more and more disciplined practice. But as time passes, he will feel obliged to raise the bar higher and higher. In Roy’s experience, this usually resulted in a total collapse of his discipline, like a dieter who succumbs to bingeing after a diet that is too rigid. For a trader, this means the sudden abandonment of the controls on his trading, which can lead to significant losses.

3. Instability Like Roy who moved from place to place looking for the perfect environment for his trading ...