No Perfection in Trading

from Abnormal Returns blog:

The perfect is the enemy of the good. – Voltaire

There is no room for perfectionism in trading.  Trading is a decidedly messy enterprise filled with false starts and missteps.  Traders trying to pick off the top and bottom ticks in the market are going to find themselves frustrated on a consistent basis.  Trying to wrestle perfection from a trading regimen is a false promise.
A need to achieve perfection is in some ways related to a need to be right.  To quote ourselves from an earlier post:

For traders, being right is overrated. It is far more important knowing when you are right, and when you are wrong, and acting accordingly.

Being right is only part of the process in attaining profitability as a trader.  In a certain sense we need only be good enough to attain profitability.

In summary, being right may be a necessary component of trader profitability, but it is not sufficient.  Proper money management techniques are required to turn trading decisions into trading profits.  While it is difficult some times to take, being wrong is a part of being a trader.  Don’t let the need to be right prevent you from becoming a better trader.

A need for perfectionism could manifest itself in any number of ways.  For instance, a chartist may be unwilling to trade if they are unable to find a stock with each and every indicator lining up in one direction.  If you are facing issues of perfectionism in the markets here are a few tips from Peter Bregman at the How We Work blog which provided the inspiration for this post.

Don’t try to get it right in one big step.  Just get it going.

Do what feels right to you, not to others.

Choose your friends, co-workers and bosses wisely.

A few quick notes on these points for traders.  The first point is especially relevant to systems traders who spend days/weeks/years trying to perfect a methodology before letting it loose on the markets.  The fact of the matter is that there are no perfect systems, and even good systems need to be adjusted over time.  Trading small may be a good way to overcome this initial anxiety.
The second point is something we touched on in another post.  No one person has all the answers.  There are as many different ways to trade as there are traders.  While it is crucial to try and learn from other traders it is you who are ultimately responsible for your trades.  So don’t let another trader’s viewpoint dictate your own actions.
The third point may be less relevant to trading, but let’s give it a try.  While most traders don’t have bosses or co-workers, but they do have friends.  This is especially true in today’s world of blogs, Twitter and StockTwits.  As Bill Luby at VIX and More notes it is important for traders to stretch themselves in search of new ways of viewing patterns and ultimately our approach to the markets.
It is often said that every trader gets what they ultimately crave from the markets.  Ultimately however what should be seeking is some level of fulfillment.  As Brett Steenbarger at TraderFeed writes:

Therein lies the appeal and the danger of markets: they can be arenas for self-development and mastery, or they can become battlegrounds for enacting our worst fears, insecurities, and conflicts. They can bring the kind of happiness on Nate’s face, or they can bring considerable suffering.

In conclusion, seeking perfection in the markets is a fool’s errand.  Traders can only strive to make themselves better with each trade and each trading session.  Only through this directed effort can one ultimately find fulfillment in the markets.
Afterword:  We are trying to practice what we preach.  This post is by no means perfect, but is in our opinion good enough to publish…