Recognition — Part 5

The Ceiling of Caution

Since the “money problem” had become clearer, I needed to find a way to reconcile with it, because the attachment to outcome isn’t something you can simply remove. At least for me, it wasn’t.

The only solution to a problem with no solution is a change in perspective, and what I eventually came around to accepting was this: You are operating under uncertainty. There isn’t a way around that. It’s part of the deal, and it is in the acceptance of this fact that you begin to make peace with that uncertainty, it also serves as the beginning stage of being able to take advantage of it. After all, that uncertainty is the very thing we are trying to take advantage of. The only real reason we buy or sell an asset at a given time is precisely because we don’t know what the price of it will be in the future. You can’t have it both ways, as traders our job isn’t to eliminate (or even reduce) uncertainty, it is to overcome it while managing the risk of being wrong.

At this point, my losses had become more controlled, and my approach was starting to take on a clearer structure. The variance between trades had narrowed, I wasn’t overtrading or forcing anything, and I was starting to get a better sense of where my edge was.

So, with my process becoming more consistent and well defined, I started to move in the opposite direction of what I had been doing before, I began slowly increasing risk again. I don’t have a good answer for how I actually went about doing this, I do recommend increasing size incrementally as far as the practice goes. But mentally however, this part is just terrifying, but at some point you have to leave the nest and trust that you’ve built up the strength and endurance to be able to fly, or at least hit the ground soft enough to be able to try again.

At a certain point, as uncomfortable as it can feel, if you don’t find a way to get comfortable taking on more risk you hit a ceiling. Not just in terms of account growth but in terms of development as well. Early on, you learn very quickly how dangerous too much risk can be, so you adapt. You reduce size, you avoid exposure, you become more cautious.

And that’s necessary, but over time, that caution can turn into avoidance. You get used to operating in an environment where the consequences don’t feel real and eventually that becomes a problem, because the skill you’re trying to build isn’t just analysis or execution. It’s decision-making under uncertainty multiplied by risk, and full process only exists when something is at stake. This is why things like paper trading, micro size, and funded accounts can essentially become useless at a certain stage. They can help you build structure, but they can’t test whether you can operate when there is real risk—and real opportunity. At some point you must expose your ideas to that environment, not out of pressure or greed, but out of the desire to maximize your effort, time, and efficiency.


Trading is a game of probability; the goal isn’t to be right more often than you’re wrong. The goal is to manage the downside when you are wrong, while giving yourself the opportunity to be right. And once the trade is over, whether you are rewarded or corrected, you must move on.

DocXBT once put it this way:

“If you don’t expose yourself to your own ideas, you’re never going to make money in this game.”

While he was speaking about high conviction portfolio trading, I believe this applies to all types of risk. It doesn’t mean throwing away what you’ve learned and being reckless, just the opposite, it means applying what you’ve learned to it’s fullest potential. It means giving your ideas enough weight that the outcome matters (psychologically speaking).

If you’ve learned to cut losses, and you’ve started to recognize what your better trades look like, then the next step is to begin trusting that process. Not blindly—but deliberately. Because avoiding risk entirely doesn’t protect you, it just caps you.

Your plans won’t always be right but if you never give yourself the chance to be rewarded when you are right, then even with improved discipline, you’ll likely stay in the same place, at best, breakeven. At some point, you must start allowing yourself to participate fully again.