More often than not, the reason we overstayed our welcome when the market was being generous was because Mr. Right insisted that there were more. What do you do when your guest (an acquaintance) refused to leave your home when the party is long over and after you have given plenty of polite hints, I don’t know about you but I can get very annoyed. I’m sure you will find a more persuasive method that may involve some physical guidance to the front door. Compare to the market, you are being very polite.
When Mr. Right deluded you to overstay the “profitable” party at the stock exchange, you could get a real KICK-IN-THE-ASS message with some serious injury to your wallet and psyche. If there is any one true organization out there that can never be accused of practicing discrimination of any kind, it is the stock market (or commodity market if that is your game). The market doesn’t care who you are, you overstay you will be punished! No if or but!
“Hey, you can’t overstay when the market open every day!” so you say. You see, “overstaying” in the market is a term that we human mortal created for ourselves to throw caution to the danger that is lurking in the marketplace. The true is that the market doesn’t care if you overstayed. In fact, the market LOVES to have you overstayed! You know why? ’cause someone has to be the patsy/victim for the piranha that feasts in the marketplace.
How many of you know about piranha? I remember very clearly even now that in one of the old James Bond movie when the villain threw a good guy into a small pool filled with piranha. After a minute in the water, only the skeleton of the poor guy floated back up. Piranha also doesn’t discriminate when it comes to body size. In fact, the larger you are (like an elephant), the happier they are. In fact, the larger you are, the more difficult it is for you to escape the deadly grasp of the piranha..
Fortunately, the piranha doesn’t always show up immediately when you enter the marketplace; for they could be busy devouring someone else! However, they could smell fear! Yes, FEAR! What cause you fear in the marketplace? YES, when you are losing money. To the piranha, losing money, even if it is a little bit, is like bleeding blood.
Whoa! How do I keep myself safe from these piranha then!??? Well, that is why we invent the term “overstay”. When you make money, you are taking food away from the piranha and they want it back! And when you lose money, the piranha immediately want to take as much of you before you come back to your sense to get out of the water.
I think we all know the “risk” we are taking in the market. But do we REALLY know the risk? The problem we all have is that we have a Mr. Right living in our home. Mr. Right is very good at convincing us that the piranha is only a myth; that if it even exists, you are immune to it. Mr. Right can also be very convincing about the market direction. When Mr. Right said the market is going up, the market HAS to go up. There is no if or but ’cause Mr. Right is very sure about it! Even when price action is showing contrary direction, Mr. Right can convince us that it is just temporary, nothing to worry about. In fact, Mr. Right even encourages us to buy more since the price is so cheap! Same playbook if the Mr. Right decided the market is going down.
After we become the feast of the piranha and what is left of us remain from the market place, we obviously want some explanation from Mr. Right. So we look everywhere and after a period of time, we realized that Mr. Right is not at home.
Categories: Trading philosophies and thoughts