(Video: Market coach Doug Hirschhorn, PhD, discusses the lessons that can be learned from Tiger Woods' handling of this week's events.)
So this week, we learned Tiger Woods really is human, after all. And for the traders out there, his situation is an excellent reminder of lessons in proper risk management. Here are 4 things we can learn from Tiger:
- Quickly take responsibility for your actions Sometimes you make good trades (decisions) and sometimes you make bad ones. Either way it is on the books and you have to deal with it.
- Choose the lesser of two evils When forced to choose between two bad options, like whether you should take a loss or hold/add to a loser, choose the option that's less bad. I know its hard, but you have to approach the decision knowing you'll live to fight another day.
- Cut your losses For Tiger, the hardest thing to do was that first admission of guilt. For traders, the hardest button to push is the first one. Once you do that, managing the risk gets a lot easier.
- Learn from your mistakes Mistakes are part of the game. Tiger is not perfect and neither are you. All that matters is that you learn from your mistakes and move on to the next trade.
If he learns his lesson, Tiger is going to be a better golfer, better person and even a better dad as a result of what he is going through. And you know what, if you learn from your mistakes, then youll be better too.
Think better, invest smarter.