It was Nassim Nicholas Taleb in 'Fooled by Randomness' who expressed the opinion , 'Beware of borrowed wisdom'.
Well I'd like to borrow a slice of Mr Talebs wisdom and its with regard to Russian Roulette of all things. He was using the 'game' of Russian Roulette to describe the approach of some traders to the markets, that is they were taking large risks and were, with the aid of lady luck, getting away with it! To put it another way, they had, so far, managed to avoid the chamber containing the single bullet but, and it is a massive BUT, the nature of the game means the player cannot totally avoid the bullet! The odds are 1 out of 6 or 5/1.
The trading equivalent of finding the bullet is a large account draw down.
Now I would liken Russian Roulette to letting an open trade go in play when trading horse racing pre-race.
In fact just saying to ourselves 'Russian Roulette' might be trigger or action word to snap us back to reality, and close out for a red or green!
Let RT put another 'slant' on this issue, I mentioned the odds earlier, 1 out of 6 or a 5/1 chance of finding the bullet, perhaps the more cautious might make the odds even money or a 1/1 chance because the next chamber is the crucial one and it either contains a bullet or it does not!
As always, take from this what you will......
RT
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