What I Learned Losing A Million Dollars

When it comes to the markets you’re supposed to do what feels good.

However, there is a common denominator among this group: rather than just taking risks, as is commonly assumed, they excel at judging, minimizing, and controlling risks.

Each of these men personalized his successes and began to believe he would only ever have success.

Whether Morgan Stanley makes mistakes is open to debate, but its mistakes are contained. Its commitment to planning, as well as committing those plans to writing, has kept the firm out of disastrous situations.

If you find those losses intolerable, deal with them by reexamining your method of analysis and refining your rules, but not while you’re in the market.

they were all in the business of making decisions, the goal of which is the profits of managing risk, not the ego gratification of being right. Remember, you don’t get any money just because you know why the market is going up or down. You only get money if your plan has positioned you to capitalize on the market’s movement, regardless of whether y

You know what you should do? Don’t go looking for supporting evidence or reasons to stay in the market. Do what feels good. Get out. There is an inverse relationship between your threshold of pain and success in the markets, so as soon as you feel the pain: get out. What if you have on a long position and prices are going up, does that feel good? D

showing more confidence than the facts support. If you try to bluff the market by breaking your rules, you will eventually lose your money.

However, if you continue to do the wrong thing in the market and get rewarded, your profits won’t be linked to any particular recurring set of circumstances or rule following on your part. This will result in what psychologists call a random reward schedule, the strongest form of reinforcement for getting a person to repeat a behavior.