The Surprising Secret To Increasing Profits Revealed!

Feb 09, 2024

In the pursuit of financial success, the conventional wisdom often emphasizes winning more. However, upon closer examination, it becomes evident that increasing profits is not the only way to profit more. Rather, a more nuanced approach suggests that the path to greater profitability may lie in a different direction altogether. It's arguably more feasible, and certainly more prudent, to focus on minimizing losses as a means to amplify gains. This recalibration of perspective forms the foundation upon which the inchworm principle is built—a principle that invites us to shift our attention towards fortifying our weakest links rather than relentlessly chasing victories.

In his acclaimed work "The Mental Game of Trading," Jared Tendler introduced the captivating concept known as the "inchworm principle." At its core lies a profound truth: in the volatile realm of trading, we can only assure ourselves of our most unfavorable decisions. This principle underscores the reality that while we may strive for optimal outcomes, the certainty lies in the inevitability of encountering our worst decisions.

Illustrating this concept on ASFX TV, I engaged my audience in a thought-provoking exercise during a recent livestream. Encouraging participants to reflect on their 10 poorest performing days of the last year, we delved into the mathematical ramifications of mitigating these losses.

Consider, for instance, an individual experiencing ten days of an average of 4% downturns throughout the year. By directing efforts towards halving the frequency of these dire days and diminishing their impact by 50%, the transformation on the bottom line is striking. In the hypothetical scenario presented, the losses shift from a staggering 40% over ten days to a significantly more manageable 10%.

pink and black ceramic piggy bank

This demonstration served as a powerful revelation for viewers, illuminating the profound influence of refining our worst decisions as opposed to fixating solely on enhancing our best choices. By embracing the inchworm principle and prioritising our trading lows, we pave a more sustainable path towards bolstering our bottom line and achieving enduring success in the dynamic arena of trading.

Please note that this post serves as an introduction to the concept of harnessing the power of refining your worst decisions to minimize losses, rather than fixating solely on winning more. Its purpose is to raise awareness of this transformative approach to trading performance.  

It is important to acknowledge that the intricacies of the inchworm concept cannot be fully encapsulated in a single blog post.

For a deeper dive into actionable strategies and insights in how to improve your C game, I highly recommend delving into Jared Tendler's acclaimed work, 'The Mental Game of Trading.' Tendler's book offers a comprehensive toolkit for addressing the psychological and strategic challenges of trading.