September 23, 2005

September 23, 2005

OPPORTUNITY NEVER SNEAKS UP O/N THOSE WHO STRADDLE THE FENCE OF INDECISION.

Successful people are decisive people. When opportunities come their way, they evaluate them carefully, make a decision, and take appropriate action. They know that indecision wastes time that could be spent on more productive tasks. They also avoid unnecessary risks by implementing their decisions gradually. They don’t attempt to make every decision at the beginning. Each action is contingent upon the success of the one that preceded it. Benjamin Franklin, one of America’s wisest men, is said to have used a simple method to make difficult decisions. He drew a line down the center of a sheet of paper, and on one side he listed the "pros" of the decision; on the other, he listed the "cons." In addition to simplifying the decision-making process, the list also served as a graphic illustration of the advantages and disadvantages of any decision, regardless of its complexity. The impact of the decision could then be quickly and easily assessed.

The pros vs cons list is a method that I have been using for years and highly recommend to anyone. Of course this is very difficult and most of the time impractical to apply to trading but we are faced with many complex decisions surrounding the trading environment and in our daily lives.

If you hang onto the pro/con sheet or even save it as a spreadsheet then it also forms as documentation as to why you took a decision at that point in time. Often you look back on a decision and say that it was not a good idea - but that's with 20/20 hindsight. If you take a look at your pro/con sheet then this will often reflect that there was information that you didn't know at the time that you couldn't have used in the decision making process.

That last sentence is doubly useful in a work environment where you may need to justify your decision 1 or 2 years down the line if it hasn't worked out.