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Trading: Balancing Aggressiveness and Defensiveness to Achieve Consistent Profits

Many traders fall into the temptation to trade as much as possible in hopes of gaining larger profits. Unfortunately, often traders overlook the importance of paying attention to potential risks. Ray Dalio, a prominent hedge fund manager from the United States, highlights this difficulty in his book "Hedge Fund Market Wizards," noting that in trading, one must be both aggressive and defensive simultaneously. This balance is key, where a lack of aggressiveness can hinder profits, while a lack of defensiveness can threaten the sustainability of earned profits.

Tips for Balancing Aggressiveness and Defensiveness in Trading:

  1. 1. Discipline in Following the Trading System:

  2. It's important to create and follow a predetermined trading system. This involves trading methods, strategies, and risk management. A clear trading plan will help you remain aggressive by only entering the market when conditions align with the established strategy.

  3. 2. Confidence Without Excessive Doubt:

  4. When signals for entry arise, it's important to avoid excessive doubt or overly high confidence. Doubt can cause you to miss profit opportunities, while excessive confidence can result in entering the market without considering signals or unnecessarily increasing lot sizes.

  5. 3. Appropriate Defensiveness:

  6. Facing losses is part of trading; however, being overly defensive can inhibit market entry actions. Taking profits periodically can help overcome excessive fear of loss. This also builds confidence and opens opportunities to increase funds or trading lot sizes.

  7. 4. Balanced Trading Psychology:

  8. Trading not only tests technical skills but also emotional balance. Understanding the aggressive and defensive behaviors within a trader is an important step towards achieving long-term success. Observing changes in these behaviors and addressing imbalances can help improve overall trading performance.

Achieving Balance in Trading:

In the world of trading, achieving a balance between aggressiveness and defensiveness is key. Understanding signals from the trading system, managing emotions well, and devising plans to address risks are crucial steps towards consistent profits. By paying attention to both aggressiveness and defensiveness, a trader can optimize profit opportunities while protecting their capital from unnecessary risks.


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