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Forex Trading Tips: Revenge Will Kill You
Revenge Will Kill You
If you’ve ever lived in New York city you know that finding a parking spot on the street is more difficult than finding water in the Sahara desert. Twice a week the city practices what it calls alternate side parking rules where all the cars must move off one side of the street in order for the sanitation trucks to clean the asphalt. So drivers in residential neighborhoods of the city follow the distinctly New York tradition of moving their cars off one side of the street, double parking them to the other and then quickly moving them back once the sanitation truck passes. By law drivers cannot leave their cars unattended until the alternative parking time has expired which in my neighborhood of the Upper West Side of Manhattan means 12:30pm.
A few years ago, back when I was dumb enough to still own a car in New York city this is exactly what I was doing. I was slouching in my seat staring vacantly into space as I waited for the clock to hit 12:30. Suddenly I was jarred out of my day dreaming by a sharp clank and a jerk. A car ahead of me had literally backed up into my car, its bumper ramming mine.
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“What the f- are you doing!?” I screamed as I jumped out of the car, but suddenly stopped mid sentence when I realized that the driver of the other car was a well known neighborhood psycho who always got into arguments with other car owners.
He stormed out of his car wild eyed and spat back at me, “What do you want?”
“More your f-ing car back. You are locking me in!”
“Move it f-wad or I’ll move for you,” I hissed back.
“F-You!” He turned, got back in his car, rolled up his window and locked the door.
All sense of calm left me. My head pounded, my breathing grew heavy and I climbed back into my car with only one goal in mind. At the time I was driving an Isuzu Trooper -- a four wheel drive, stick shift monster with massive tires that ate everything in their path. The Trooper was a true urban warfare vehicle that could have been taken straight from the set of a Mad Max movie. The car in front of me was a Volkswagen Rabbit.
Without so much as a second thought, I pressed on the gas pedal and pushed the Rabbit out of the way, as other drivers watched in stunned silence. Once I moved him a several yards forward I backed up the Isuzu and drove away parking at the next block up, in order to avoid the miserable bastard for good.
A few weeks later I got a knock on my door. A young uniformed cop and the crazy driver stood in front of me looking grim and serious.
“This gentleman is accusing you of assaulting him with you automobile.”
“What?! He assaulted me!” I shot back, but the young cop seemed unimpressed.
“Ok,” he said levelly, “Let’s go look at the automobiles.”
We trudged downstairs and walked the street until we found our cars. As we walked I tried to explain to the policeman what happened and pointing out the injustice of it all. He listened impassively and offered no response. We crowded around our cars. The Rabbit’s rear end looked like it was beaten to pulp with a giant fist. The front bumper of my Isuzu was spotless.
“Ok Mr. Schlossberg. Here is what we are going to do,” the cop said calmly. “Either you agree to pay for damage this this car, or I will have to arrest you on the spot and process you at the station.”
I clenched my teeth seething. My son who was seven at the time was due back from school in half an hour. There would no one at home to receive him. I had absolutely no choice.
“Fine. I’ll pay for the damages, “I spat out through my clenched teeth. The psycho driver smiled gleefully.
“Let me ask you something, “ I said to the cop as we headed back towards my apartment building.”What am I supposed to next time something like this happens?”
The cop looked at me with some sympathy and said, “Simple. Don’t take the law in your hands. Call us first. You have a problem with somebody, call the police. Let us deal with it.”
Those words were some of the wisest advice I’ve received in all my years of living in New York. It is simply amazing at how quickly your opponents will fold once you offer to call the cops to settle the dispute. From surly street vendors, to obnoxious proselytizers in the subway, to rude and reckless drivers, the threat of police quickly restored order and rationality to most situations I’ve encountered since.
$2000 poorer and many years later I learned that in life revenge is rarely worth it. Nowhere is this dictum more true than in trading. Revenge trading is responsible for more unnecessary losses than any other trading mistake. How many times have you gone on a great winning streak, steadily building up account equity, only to hit one or two losses and then go into a manic trading frenzy to try to get it back only to lose all hard won gains in matter of minutes hours or days?
I wish I could say that knowing about this phenomenon is enough to prevent it, but alas it is not. Just like whiff of drug to a former addict or the smell of a cigarette to a former smoker, the temptation to revenge trade never leaves us. We need to appreciate the fact, that being human and emotional we can never fully control this behavior, bit only contain it. For short term traders like me, the single best thing to do – and also often the hardest – is to actually leave the screen after a series of losses. Three strikes and you are out may not be a great penal policy, but it works marvels in trading. The great futures trader Buzzy Schwatrz used to say that you cannot go from reverse to forward before first going into neutral. Walking away from the screen is the only way I know to go into neutral in trading and short circuit the very deadly cycle of revenge.
Now for this week’s video.