Using INVERSION to be a better Trader ?

The ancient Stoic philosophers like Marcus Aurelius, Seneca, and Epictetus regularly conducted an exercise known as a premeditatio malorum, which translates to a “premeditation of evils.”

The goal of this exercise was to envision the negative things that could happen in life. For example, the Stoics would imagine what it would be like to lose their job and become homeless or to suffer an injury and become paralyzed or to have their reputation ruined and lose their status in society.

The Stoics believed that by imagining the worst case scenario ahead of time, they could overcome their fears of negative experiences and make better plans to prevent them.

While most people were focused on how they could achieve success, the Stoics also considered how they would manage failure. What would things look like if everything went wrong tomorrow? And what does this tell us about how we should prepare today?

If we implement the same approach in trading, Most of traders are running towards successful trading system, which will give them successful trade and help them make lots of money. But very few traders focus on how will they react when market starts going against them.  Most of traders even avoid thinking about loss and this is the major difference between a successful trader and unsuccessful one.  As a trader we need to face our fear,our weakness envision them and take the preventive steps to avoid them. If we do that success will come to us automatically. This technique is called  INVERSION.

Instead of asking how to do something, ask how to not do it. Instead of looking for the setup which will give me successful trade, I will avoid those set up which gives me unsuccessful trades.  I have begun to realize that inversion is a rare and crucial skill that nearly all great successful person use to their advantage.

Inversion forces you to consider aspects of a situation that are often hidden at first glance. What if the opposite was true? What if as soon as i enter the trade and it get stop out, Will i exit immediately or will wait ? What if I get stop out 6 times in a row, What will i DO

Ask Yourself a Simple question “What do you want to avoid being unsuccessful trader?”  “Such an easy answer: Stop being Undisciplined and avoid doing IMPULSIVE Trade.

Now your mind will start thinking how can i do that, and that becomes the first step toward successful trading.

Using Inversion in  TRADE Management

Imagine You have started trading with a decent capital and Now fast forward six months and assume
that your trading account lost 50% of capital

Tell the story of how it happened. What went wrong? What mistakes did you make? How did it fail? The idea is to identify challenges and points of failure so you can develop a plan to prevent them ahead of time.

Start applying INVERSION in your trading and life and reap the benefits of sucess.

3 thoughts on “Using INVERSION to be a better Trader ?”

  1. For trading – just think like a robot with a predefined loss and profit booking target. Restrict to trade max 4. I deduce the same idea based on what not do ( after suffering small and big loss)

    I learned profit pyramid as what to do for bigger gain.

    That’s sound simple. Isn’t it?

  2. I always do it whenever I take a financial decision, I call it worst case scenario. It helps me to know the bottom, where my decision can take me and if the risk suits me I go ahead. For me this is calculated risk but never knew it’s called Inversion. Thanks Sir for sharing this post.

  3. AlphaPowerTrading – Inventory based approach
    Bottom wholesaler loads truck. Next fundamental analyst. Then technical analysts pounce upon. Then slowly fundamentalists reach their profit target. Top, wholesaler distributes. So, in between technical analysis will always work as its required by wholesalers to inflate prices.

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