Ever notice how behavior
in one area of life can apply to behavior in other areas of life? For
example, I've noticed a number of things while driving that apply to
online trading. One of them is regarding how people behave toward traffic
signals.
In the USA, where I live, all the traffic lights are red, yellow, green -
red for stop, yellow for slow down or caution and green for go. The lights
always change in order from red to yellow to green and back again to red
after a time.
How drivers relate to the changing lights is NOT always the same. There
are three types of drivers and responses to seeing a green light:
Type one drivers believe the light will change to red at any moment. In
anticipation of the change, they begin to slow down far in advance. I call
them "Red Lighters."
Type two drivers know green means it's ok to go. They continue on their
present course and speed, making no changes at all as they approach the
light. I call them "Green Lighters."
Type three drivers know the light could turn yellow at any moment, so they
step on the accelerator to catch up to the light as quickly as possible,
not wanting to miss it. I call them the "Yellow Lighters."
Many people apply these same approaches to most of life's opportunities,
including online trading. Maybe you do the same thing.
If you see an opportunity
approaching, do you slow down, believing that since it won't last you
shouldn't be too hasty or you could be stuck in a bad deal? "Red Lighter."
Or, do you see the opportunity coming, and just let it come at its own
pace, taking your time and accepting whatever happens when it reaches you?
"Green Lighter."
Or, do you rush to it, knowing that it could be gone at any moment so best
to jump on it immediately so you don't miss out? "Yellow Lighter."
Each of these approaches has its risks, and its rewards. Red Lighters take
no risks, and therefore never "push their luck" by hurrying into anything.
On the other hand, what risks are they actually taking by potentially
missing out on opportunity?
Green Lighters just want to travel safely and smoothly. They don't mind
what happens along the way so they just keep going with the flow of
traffic. Sounds smart, doesn't it? Yet, what real gain is there in being
"just like everyone else"?
Yellow Lighters don't want to miss any opportunity so will do whatever is
needed to capture the potential reward. But how big is their risk in being
first?
Each is going the same direction, and could even be in the exact same type
of vehicle, but none is actually any more guaranteed to arrive at their
destination than the other. The Yellow Lighter will probably get there the
fastest, but could also get into an accident along the way from so much
speeding. The Green Lighter will arrive safely in a reasonable time, but
will likely arrive with the rest of the crowd and never be early. The Red
Lighter will probably always be late, and will typically spend so much
time on the road that they never get to fully enjoy their destination.
Which are you? Which do you want to be? How do you assess risk and reward
in your financial decisions, your daily activities, your life? Like it or
not, everything we do every day has a risk and an associated reward.
Getting in a car each day and driving to work carries with it the very
real risk of death from a traffic accident, with the reward on the other
side of the commute being a paycheck. Everyone must assess the risks and
rewards in their life for themselves on an ongoing basis, something that I
myself do constantly every day and that I encourage you to do as well. You
just might be surprised at the trades you find yourself making
unconsciously.
I invite you to notice your trading style and adjust it according to the
results you wish to achieve. Being conscious of our behavior patterns and
changing them when appropriate can make all the difference in online
trading success.
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