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A Trade Is Not Your Spouse
By Boris Schlossberg | Published  02/6/2010 | Currency , Futures , Options , Stocks | Unrated
A Trade Is Not Your Spouse

"Do you take this woman to be your lawfully wedded wife, to love and cherish? In sickness and in health? For better or for worse? Until death do you part?" How many times have all of us heard those words? We all know them by heart and can repeat them in our sleep if asked.

No doubt marriage vows posses enormous emotional power for most of us, but in trading those few simple sentences can be deadliest trap ever made. Although men are often portrayed as irredeemable lotharios with zero ability to commit, the truth is that the concept of loyalty and fidelity is ingrained in boys from early childhood. From "Never rat on your mate" to "Never hit on your buddy’s ex-girlfriend" to the cry of "Semper Fi!" of US Marines, men are inculcated with the idea that loyalty is the highest value in life.

Unfortunately in trading, loyalty will ultimately get you killed, or at the very least bankrupt. A trade is not your spouse and you should never marry it, because if you do, 99 out of 100 times the relationship will end in tears. The average man is extraordinarily monolithic in his approach to life. We like simple, logical, belief patterns that we apply universally. Once taught that "Quitters never win and winner never quit" we tend to approach everything we do with the same nose-to-the-grindstone attitude.

Women on the other hand understand that fidelity in one arena, does not necessarily require fidelity in another. That’s why women tend to be much better traders than me. They can cut tier losses ruthlessly with all the cold calculation of a mercenary. Women generally do not invest their ego into trading and tend not to view the outcome of each trade as the great moral judgment on their character.

One of the reasons why men become so vested in each trade, stubbornly refusing to admit their mistakes is because they lose sight of the end goal. What’s the object of trading? Is it to win each and every time? No. The goal is to generate a positive return at the end of each year. If that's the case than each trade is less than irrelevant.

Is it really necessary to destroy your account over one or even ten incorrect trades? Of course not. In real life, fidelity may be valued, but in trading promiscuity is the far better path. A trade is not your spouse and when it becomes difficult or unpleasant, your attitude should be – NEXT!

Boris Schlossberg serves as director of currency research at GFT, and runs bktraderfx.com.