Sitting on the Fence

August 20, 2010

I got an email from a client recently who had reestablished contact after a few years. We did a little catching up in an exchange of messages, and it wasn't long before the subject of trading came up.

"I haven't done any trading for a while," she said. "I guess I'm still on the fence about it."

I was quick to compliment her for her decision not to trade. After all, the old market adage is "when in doubt, stay out," and she was definitely expressing doubts about her ability to trade successfully. The choice not to trade was an appropriate one for her.

Truly though, an attitude of "sitting on the fence" is not a bad one for even the most experienced astro-trader.

In my experience, it's the traders who are absolutely sure that they know what they are doing in the markets, so much so that they believe that they know what the markets are going do, who wind up making the biggest mistakes and losing the most money.

Over-confidence can sometimes get us into trouble, and the markets are particularly unforgiving in that regard. There are times when sitting on the fence is actually a good idea!