I’m a genius, an idiot, and neither one.

samuel-goldwyn-producer-give-me-a-smart-idiot-over-a-stupid-genius-anyI’ve experienced a bit of blow-back from my Take your profit and run post here.  First, let me tell you, this is awesome. I love feedback, it’s how I grow.  I especially love contrarian feedback.  It get’s even better when that contrarian feedback comes from other traders.  Apparently most traders don’t do too well, so when people disagree with me in trading, or business in general, I take it as a sign I’m on to something.

After publishing “Cut your losers fast, and let your winners run (right into your stoploss)“, I was told it was the best advice I’d ever given.  Then I was told it was the worst advice ever written.  I was called a genius, and I was called an idiot.  Multiple times in multiple ways. Some readers were relieved to read that someone else was content with single digit pips, others felt dumber after reading it.

Which camp are you in?  Is this guy Matt, who actually trades, with real money, to pay real bills and support a real family with two real kids about to go into a very real college, an idiot or a genius?  I’ll tell you right now that a genius I am not.  It seems to me that being a genius would be a lot more work than I’m really interested in.  I’m not an idiot though either.  I understand simple concepts like 4 is bigger than 3, and they’re both bigger than zero.  I also understand that this is about as much understanding as I need to make a living trading.  Most importantly however, I understand that what I’m trying to do is make money.  I’m not interested in being a “bad-ass trader”.  I don’t care about picking a trade from top to bottom, or calling a high to the pip.  I don’t care about timing entries and exits perfectly or setting personal pip records with each trade.  All I care about (in trading anyway), is making money.

Yes, money is made in this business by letting losers stop out and letting winners go to their targets.  Money is also made in this business by closing the losers before they become losers, and closing your winners before they hit their targets, because, well, it’s time to go to dinner, or go outside, or write a blog post or…  For me, winning is just a side-effect of not losing.  As long as the balance isn’t going down, it’s going up, and it’s easier for me to influence the speed at which it goes up with size rather than distance.  Again, I am not after pips, I am after money.

I’ve lost track of this before.  In a past-life I was so consumed with “learning to trade”, that forgot about making money.  I’d take trades I didn’t want to, because the “rules” of the “system” I was using said to.  I’d pass up opportunities the “system” said were not opportunities.  I’d create rule after rule, attempting to refine and improve the “system”.  What I didn’t realize, was that with each rule, I was also creating an expectation.  In case your own trading account has not slapped you with this realization yet, the human psyche is particularly vulnerable to expectation, especially when they are not met.  These expectations blur the line between what we want and what we need.  Do you need a hundred pips, or do you need a thousand dollars? If you need a thousand dollars, would you reject a $20 bill? Do you want bragging rights or do you want more money in your account than yesterday?

In the end, whether I am a genius or an idiot, is irrelevant.  What’s relevant is that I make money, I sleep like a baby, and every day is awesome.

Awesome trading.



6 thoughts on “I’m a genius, an idiot, and neither one.

  1. Osmin


    Awesome, Awesome, Absolutely awesome. I am with you in the case that the best way is not to lose, rather than trying to get all the pips of a trend.

  2. Manuel

    Dear Matt,
    I completely agree with you. The secret for me is trying to catch every pip you already have and grow your account slowly. But the real problem is that you have to avoid almost any loss, and not mention to enter in a big loss. I’m working in this strategy since 2 years ago. But I’m still facing losses and I’m finding the path to avoid losses. If you don’t let wins run, you simply can’t afford losses. And that is really really hard to do. How do you suppose to avoid the majority of the losses. Regards.

    1. mlacoco54 Post author

      Hi Manuel!
      In this business, losses cannot be completely avoided, but they are one of the few aspects that we do have control over. For myself, and any other trader, reigning in the number of losing trades can be accomplished by becoming increasingly selective about the trades you take. In other words, if you’re looking at 5 totally awesome trade ideas, you only concern yourself with the absolute best (in terms of probability) one. Additionally, most traders don’t give enough consideration to how well their trade style actually fits with their personality and situation. If you really love your own trading style, getting good at it is unavoidable and the quality of your entries will reflect this.

      Tiny losses and break even trades keep your capital in your account, but they don’t go a long ways towards building on what you’ve got. Sometimes though, they’ll run in your direction. It’s unavoidable, and a trailing stop loss here can lead to massive gains. I mean massive.

      Stay in touch, and I’d love to talk more about it!


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