Ray Dalio writes in the Institutional Investor on the power of not knowing.
Dalio is the founder of Bridgewater Associates and one of the greatest traders alive. If you have the chance to read the chapter on him in Hedge Fund Market Wizards, I highly recommend it. If not, he shares some of his best advice.
"To make money in the markets, you have to think independently and be humble. You have to be an independent thinker because you can't make money agreeing with the consensus view, which is already embedded in the price. Yet whenever you're betting against the consensus, there's a significant probability you're going to be wrong, so you have to be humble."
He talks about an embarrassing episode where he told anyone who would listen that a depression was coming in the early 1980s. What he took away from that was finding people to disagree with him and trying to fully understand their reasoning. With that in mind, he decides whether to accept or reject their arguments.
"There's an art to this process of seeking out thoughtful disagreement. People who are successful at it realize that there is always some probability they might be wrong and that it's worth the effort to consider what others are saying."
He says the mindset is like being intensely worried about being wrong and asking questions instead of defending a position.
Here at ForexLive, we know our readers don't always agree with us and we don't always agree with the market but we hope that from time to time we offer something to help you question your trading ideas and come to a more-confident conclusion. We certainly appreciate hearing your views.
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