Trading Rule #7 – Via Pulp Fiction’s Marcellus Wallace

(note: NSFW language contained within this post, and within the embedded video)

I was watching the all time great movie Pulp Fiction last week, and Marcellus Wallace’s little chat with Butch before The Fight triggered an idea for another Trading Rule.

This one should be obvious, but I see this mistake exhibited so often in sentiment that is portrayed online these days, mainly with respect to the precious metals nonsense I read so much about.

The rule is this:

You’re trading/investing to make money – not to feel good about yourself, or to feel “proud” that you were right.

In the words of Pulp Fiction’s Marcellus Wallace, portrayed by Ving Rhames, “Fuck pride. Pride only hurts – it never helps.”

This rule is kinda related to rule #4, and also rule #2.    If you can’t admit to yourself that you have bad information and may have a bad thesis on which you’ve based your trade, you don’t stand a chance.   Don’t let pride get in the way of your PnL – it’s ok (in fact, it’s essential!) to admit that you were wrong, cut bait, and live to fight another day.

You can probably guess that when I write this post, I’m thinking again of the poor schmucks who were told, and actually believed, that they should “buy silver, bankrupt JP Morgan.”   In fact, such people still exist, amazingly – they are too proud to admit that their thesis is massively flawed: pride prevents them from admitting that their information doesn’t jive with reality.  Instead, it’s much easier to immerse oneself in online forums with people who will tell you to “keep the faith” or that “it will be ok – it’s gonna happen soon.”   Repeating bad information doesn’t make it any truer.  Confirmation Bias is good for your pride, but bad for your PnL.

Fuck pride.

related:  Kid Dynamite: The Rules

So You Still Think JP Morgan Is Short Billions of Ounces of Silver?

Congratulations Silver Warriors (That’s Called Sarcasm)



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