While this is not investment advice is plastered all over everything everyone writes online this blog included I figured Id specifically label this post to the contrary.   Its not the first time Ive written about this concept, but if I could give you one piece of advice for 2015 (and beyond) it would be this:  take blame out of your game.

Last year I wrote Trading Rule #9: Blame is for Losers .   This is a reiteration and expansion of that post.

When things dont go your way in the markets, you can do one of two things:

#1 is the easy and natural thing to do: its hard to admit we screwed up, but its easy to blame:

short sellers

market maker manipulation

fake government statistics

high frequency trading

El Nino

bad data from some internet finance site

the Hollywood Liberal Elite

complicated mortgage documents

etc etc etc

Nothing, however, can change the fact that youre the one who clicks those buy and sell buttons and that you should take responsibility for your actions.   It may make you feel better to absolve yourself of responsibility and assign blame to other parties, but it also virtually guarantees that youll repeat behaviors that led to the situation in the first place.

Speaking from experience, my personal trading mistakes can usually be boiled down to the usual general categories of fear and greed.  I sometimes sell a stock at an inopportune time in an effort to stop the pain out of fear, and on the other side I hold crappy positions too long because I have unrealistic hopes of gains to come greed about the riches that could be while I simultaneously talk myself into ignoring the risks that I know exist.

Anyway,  my point is this: the retail investor today has unprecedented access to tools that allow him to easily and cheaply express almost any market view he wants to express.   This is a great development, but it can also give the inexperienced and ignorant rope to hang themselves.   If you want to trade triple-leveraged ETFs, knock yourself out but dont go looking for people to blame if you lose money.  If youre trading binary options (using a BinaryOptionRobot no less!), have a field day but dont go trying to place blame if it doesnt work for you.

The current suite of products available to even retail investors means that those retail investors need to be more responsible for their own actions: for understanding the products they are trading .   Looking for people to blame if you dont take the steps to know what youre doing is loser behavior, and will virtually guarantee that you make those mistakes again.

My investment advice is this:  when things go wrong, analyze your process, play Devils Advocate with your own thesis, and figure out what you might have done wrong not who you can blame for what went wrong.

-KD

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