The Closest Thing to an Uncertainty Cure

06/12/2012 2:30 pm EST

Focus: TRADING

Anne-Marie Baiynd

President and CEO, TheTradingBook.com

Using reliable information the trader believes in can help them overcome uncertainty and the need for added confirmation, says Anne-Marie Baiynd, ultimately leading to better execution.

Living with uncertainty: In today’s trading markets, there is so much information out there, yet it always seems like we don’t have everything we need. Here is Anne-Marie Baiynd, who is going to tell us how we live with the uncertainty when trading the markets.

Living with uncertainty is something that we have to get accustomed to.

Many times, beginning traders want to have more and more information that validates our decisioning. We wait around until we have more information to know that we are right, and many times by the time we do that, it is all gone.

So really, that bridge between “I don’t know what to do” and having the confidence to take the trade comes with learning to be comfortable with the knowledge that there is a lack of information.

And what you have to do is just act on the information that you have; just make sure it is as reliable as possible.

Many times the reason our trades break down is because we are waiting for too much validation, and that element of uncertainty is always going to live with us.

We don’t really like making decisions without having all the information, especially when it involves our money, and so we have to come to a space where we go “OK, I am reasonably sure that I can move forward and I’m going to be able to live with that level of uncertainty.”

Right, and when trading, knowing that there is so much information out there yet only being satisfied with very little of it can be an unsettling prospect.

That’s exactly right, and though it is true that you will be giving up some information, you really do have to get to the space where you do winnow it down and you do say, “Listen, I am going to be comfortable using these three things. I realize there is something else that can give me more information, but I’m willing to shift that to the side so that my decisioning becomes better.”

Really, for most traders that have been spending a little time learning about the market, they have all the skills on board to be good, but their ability to decision is where they are having the problems, and that decisioning difficulty comes from having too much information.

Right, and it seems that when you get down to that, there is always something that might be able to make it a little bit better, but the temptation becomes to avoid the trade.

Exactly. It’s okay to have shades of gray; nothing is going to be black and white in the market.

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