A Pocketful Of Base Hits

My most recent posting absence I can blame completely on my Forex trading (that and a bit of long weekend travel). It has been very profitable, but also very time consuming. I've adopted a short term trading strategy, having now put any hope or desire for a working long term carry trade strategy out of my mind. Maybe I'll revisit that sort of Forex trading again someday, but it seems to me that a successful method requires more capital and different goals than I have right now.

Recently, while listening to Dave Ramsey's radio show, I heard him mention a phrase that I'm thinking of making into a plaque to hang on the wall above my computer:

"The enemy of the better, is the best."
I've since seen this expressed in a similar way elsewhere as "the best is the enemy of the good" and a handful of other variations. The reason I like it is that in my trading, this describes a sort of paralysis that can set in when a trader is in possession of a winning trade. I've experienced this many times now: I'll have a trade in the black, cash on the table for the taking, and I'll suddenly start thinking, "maybe it will gain a little more..."

And sometimes the trade does continue to gain. Many times, however, the gains quickly slip away. They'll frequently reappear later, but sometimes they may not, or will again only after scaling in with additional positions, increasing risk and decreasing profit relative to the amount of capital I've committed to a trade.

If a trade is winning, at that moment I am in a better place than where I started from. I can close the trade right then and solidify that betterment. But is it "the best?" That can't be known with certainty until after the fact, and thus I sometimes hold out for more, which the majority of the time is simply gambling. This is why I like that saying and think it applies to this scenario: I could better my financial position by clicking "sell" and closing the trade, but I hold out for one better, something I may not get, and in fact end up no better than before or possibly even worse off. The enemy of the better, is the best.

Another way of conceptualizing this is through a saying that holds identical meaning, "a bird in the hand is worth two in the bush." Or, as to the title I've chosen for this post, in baseball, it's more effective and "profitable" to stack up a series of base hits than it is to constantly try to hit home runs.

As we head into the new trading week when the currency markets revive later today, this is what I will be working on. When I have profits and as soon as the momentum of my winning trades seem to stall, I'm taking them.