Excerpt from Alden's writings!
Here, everyone has at some point felt very confident. I understand how the market is reacting to news, why that price level becomes support, why MACD and RSI are diverging. Everything has an explanation, and I thought that if I understood it, I would be safer. But then you realize one thing not mentioned in any material: "Understanding is one thing, but being able to endure that situation is another."
Knowledge creates understanding, but it does not create the courage to endure. You may know why the market is declining, but you cannot be sure you can withstand that decline with a losing position. Knowing does not mean being able to act. Especially in trading, where emotions can drown out all the logic learned.
I once entered a trade with a very strong logical belief. The analysis was correct, the trend was clear, all indicators agreed. But the price still reversed. And at that moment, I didn't know what to do with the feeling of disappointment when the theory couldn't save my account. No book teaches you how to handle the bitterness when you are right but still lose money. If I don't have the right mindset, knowledge, aside from giving me the ability to cut losses at the right time, only makes me better at justifying when I refuse to accept being wrong. You might know every candlestick pattern, but you don’t know how you will react when the price moves against you by 5% in 30 minutes. Survival does not come from being good at analysis, but from keeping a cool head when everything is chaotic.
The market does not punish you for not understanding, but for reacting wrongly when it is not as you imagined. I have held onto a position just because I regretted the analysis effort. That was when I realized:
"Losing is not as scary as how you deal with that loss"
And that reaction is not found in any technical model. Mistakes do not always stem from ignorance but often from a wrong reaction after a small loss: holding onto losses, overtrading, or breaking discipline. Those reactions are not in the books.
Alden once thought that the more you learn, the less risk there would be. But the more I learned, the more I hoped. I thought if I did the right thing, the market would reward me. But the market owes you nothing. It does not reward hard work, nor does it forgive you for acting wrongly just because you understand it well. Most people believe that if they know enough, they will win. But the market does not reward the knowledgeable, but the one who acts at the right time and maintains discipline after many failures. No book teaches you how to keep your mindset when you are continuously in the negative. There is no program that trains you on how to preserve your money when there are no clear opportunities. That is a skill you only learn when you are swept away by the waves and still decide... not to give up.
Later, Alden realized: the survivor is not the one who understands everything, but the one who knows how to adjust when things go awry. Survival in trading does not come from a thick bookshelf or hours of analysis; of course, it is a necessary condition... but not enough. Surviving in the market comes from the ability to stay calm when the price goes against you, the ability to sit still when things are unclear, and the ability to tell yourself: "Enough, I will stop this time." Those things are not taught in any course. They only come when you have been swept away a few times... and still choose to keep swimming. Just like knowing how to swim does not mean you will not drown, because technique is one thing, while staying calm when being swept away is another. Trading is the same!
Survival is not a byproduct of knowledge, but it is the result of experience, failure, adjustment, and... continuing to live.