Tuition

For the trader still early along the learning curve, coping with the concept of market tuition can be frustrating to say the least. In essence, a pupil of speculation is forced to pay, quite begrudgingly and usually when least expected, an instructor in absentia for lessons as yet to be revealed. He may make a series of down payments without ever realizing what exactly he is to be taught, nor have any inkling of the remaining balance owed, for the final cost of tutelage is not determined until the course itself has been passed.

How do we minimize the cost of tuition for so amorphous a lesson? A way to begin is to distinguish those losses which may provide some insight to ourselves from those that are just part and parcel to any trading plan. Was the trade itself an expression of our methodology, or done on impulse? Did the loss occur at a point in time and/or price that specifically invalidated the reason for the trade? Was the magnitude of the loss predetermined before the trade was executed, or the result of some arbitrary threshold of pain? Is there a pattern emerging from past trades that we can identify? The list goes on.

The bottom line is not to let our losses go to waste; vivisect them while they're still fresh in the spinal cord, look into the impetus behind the trades and try to glean the nature of their source, whether technical/external or psychological/internal. We need not dwell on our mistakes excessively, but to relegate them to bad luck or sweep them under the rug of "revenge" profits is to squander a pre-paid opportunity for progress. Maximize the value of your tuition, or end up maximizing the total cost of education.