You need to win 51% of the time...

I vividly remember being injured as a collegiate football player. I had finally won a starting job and I broke my thumb on the opening kickoff of game six. Nine days later, I had surgery, effectively ending my regular season. But the playoffs were just a few weeks away and as the #3 ranked team in the nation, I had just 2 short weeks to recover and find a quack doctor who would 'OK' my hand for game play.

Then losing happened. We lost to the lowliest team in our conference and were subsequently unable to rebound the following week against our fiercest rival. Our rank tumbled and we were shutout from heading to post-season play. I watched in disbelief as the season I had invested in crumbled beneath me.

I tell this story not to invoke sympathy, rather to highlight the struggle of playing a game where we don't always control all of the pieces. This isn't Chess, where all pieces follow specific rules and all participants (and observers) have all the information. Rather, it is like Stratego and the idea that collecting proprietary information, planning and strategic implementation play a huge role in the size of our return.

Losing is part of life. Sometimes we just get the raw end of the stick and are forced to trade out of it. I've found that being self-aware plays a large part in how I handle a loss. If my first trade of the day goes horribly against me, I know that I'm going to have to work that much harder to have a positive day. But there is another force at work. The internal anger from getting run over on the 'first play from scrimmage'  has the tendency to sideline me for the entire trading session. Realizing that I'm predisposed to trade poorly, I have had to develop the ability to stand back and objectively trade again rather than sulking at my desk for the rest of the day.

One of the partners in the first firm I worked for was Dutch. He had a bunch of interesting phrases:

• "Smoke whatever you  want and drink as much as you like, but if you come to work drunk or high I'll rip off your head and piss down your throat...then I'll fire you."
• "Understand that tanstaafl (there aint no such thing as a free lunch) is absolutely true even if I offer to buy you a meal."
• "The worst trade you'll ever make as a rookie is the one where you make a lot of money."

Those three may have been true, but the one that always bothered me was:

• "You only need to win 51% of the time"

I just don't subscribe to that logic. I believe the skill involved in being a successful trader is to be clairvoyant enough to know when your trade is going against you. You can lose 75% of the time as long as you cut your losers and press your winners. It is my experience that tells me I still have a tendency to do the opposite, even though I know what should be done. That is where I stand. I want to be the guy who can get hit in the mouth on the first play and yet still finish the game as though I was in All American form. My goal is to be able to take a garbage hand and finesse my way to a winner.