Take calculated risks rather than impulsive ones from "summary" of Reminiscences of a Stock Operator by Edwin Lefevre
There is a fine line between taking a calculated risk and acting on impulse. The former involves careful consideration of the potential outcomes, weighing the pros and cons, and making an informed decision based on analysis and research. On the other hand, acting impulsively means making a decision without fully understanding the risks involved, without a clear plan or strategy in place. In the world of trading, it is essential to be able to differentiate between the two. One must be able to resist the urge to act hastily, to take a step back and assess the situation objectively. This requires discipline, patience, and a rational mindset. It is easy to get caught up in the excitement of the moment, to let emotions cloud judgment. But successful traders know that emotions have no place in the market. Instead, they rely on logic and reason to guide their decisions. They do their homework, they analyze the data, and they make calculated moves based on solid evidence. They understand that every trade carries a certain level of risk, but by being prepared and informed, they can minimize that risk and increase their chances of success. Impulsive traders, on the other hand, often find themselves chasing after quick profits, taking unnecessary risks, and making decisions based on gut feelings rather than facts. They may experience temporary highs when they hit it big, but in the long run, their lack of discipline and foresight will ultimately lead to failure. In the end, it is not about taking risks for the sake of taking risks, but about taking the right risks at the right time for the right reasons. It is about being strategic, thoughtful, and intentional in one's actions. By doing so, one can avoid the pitfalls of impulsivity and increase their chances of achieving long-term success in the market.
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