13 Jul Turning Victory Into Defeat
Turning Victory Into Defeat
July 13, 2022
In tennis, it’s pretty easy to pick out the can’t-miss prospects.
As the experts say, success leaves clues.
In no particular order, a can’t-miss prospect:
- Has specific goals with a specific deadline from the very first lesson.
- Is open-minded to new possibilities.
- Listens well.
- Shows up every day (by choice).
If a student did 1-4 of those things, success was inevitable. (Notice that none of things had anything to do with hitting tennis balls.)
So, the obvious question is: Why doesn’t everyone do that?
Why would anyone know the recipe and then do the opposite of that recipe?
In trading, after almost twenty years of research, I’ve found there’s a checklist for good investing, too:
- Have specific goals with a specific deadline from the very first trade.
- Be open-minded to new possibilities.
- Shows up every day by choice.
- Trade the system long-term (minimum 5 years, maximum forever).
- Utilize trend following, breakouts, or an asset that pays you back.
Why would anyone believe that list and then do the opposite? It’s mind-boggling. And, horrifyingly, it happens to all of us.
Here’s a system we’ve talked about before. It’s called the Dragonfly Small Stop (shown on the Performance Page) and it trades breakouts that are backed with high momentum. If traded on a Forex pair that trends, research shows that this system consistently produces a significant amount of money over time.
As “proof” of that, here’s the Equity Curve of the Dragonfly Small Stop on the GBPJPY from August 2021 through July 7, 2022:
It’s made a hypothetical $6,700 trading 1 lot each time in the past year–if we left it alone.
Yes, it uses breakouts/trend following and yes it’s proved itself to be profitable over the past 18 years– and in the past year.
And yet it’s easy to lose money with this winning system. It’s easy to lose money even though it’s profitable.
And we’ll talk about three ways to turn victory into defeat in the next Newsletters with the hope that sabotage leaves our lives forever.
Talk to you soon.
It should not be assumed that the methods, techniques, or indicators presented in these products will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented on these sites are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading.
HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.