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Risk and Me: A Trader's Journey Towards Rational Decision Making

Cover Image for Risk and Me: A Trader's Journey Towards Rational Decision Making
Sorakthun Ly

Trading is a journey, a personal voyage through a sea of numbers, charts, and emotions. As a seasoned trader who's navigated the choppy waters of the stock, forex, and cryptocurrency markets, I've learned a lot about myself, particularly in relation to risk. Today, I want to share a significant realization I've had: my illogical response to risk.

Grappling with Risk

There's something about risk that's both enticing and terrifying. The thrill of a potential win, the dread of a possible loss—it's a constant tug-of-war. And, surprisingly, I found that rather than being afraid of losing a big amount of money, I would hold out on a position, hoping for a win to materialize.

This behavior, I realized, was not just risky—it was irrational. By holding onto a position, I was increasing my exposure to risk, allowing potential losses to grow, all in the hope of a turnaround. I was playing a dangerous game, one where the stakes were high and the odds were not in my favor.

A Shift in Perspective

Coming to terms with my irrational approach to risk was a wake-up call. I realized that I would rather lose a significant amount to confirm that I was wrong, as opposed to being proactive about acknowledging my error and not taking unnecessary risks. This realization hit me hard. I was not just fighting the markets—I was battling my own stubbornness.

It took a shift in perspective for me to realize that it's okay to say that the market is not going my way. Admitting that I was wrong, accepting that a trade wasn't panning out as I had hoped, was a difficult but necessary step. It was a move towards rationality, a step away from pride and towards prudent risk management.

Embracing the Sidelines

In the world of trading, there's a saying: "the trend is your friend". But what happens when there's no clear trend? What happens when the market is on the sidelines? Most of the time, that's exactly where the market is. It's not in a bullish run or a bearish dive—it's just there, oscillating, waiting.

I learned that being on the sidelines is not a bad thing. In fact, it's a good thing. It's a chance to regroup, to reassess, to plan my next move. It's a chance to manage my risk, to ensure that I'm not exposing myself to unnecessary losses. It's a chance to be patient, to wait for a high-probability trend, to make my move when the odds are in my favor.

Final Thoughts

My trading journey has been as much about understanding myself as it has been about understanding the markets. I've learned about my illogical response to risk, my stubbornness in the face of potential losses, and my ability to embrace the sidelines. I've learned to be patient, to manage my risk, and to make rational decisions.

And while the journey is far from over, I'm proud of the progress I've made. I'm proud of the trader I've become—a trader who's not just driven by profits, but by the pursuit of rational, prudent trading.

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