Common sense may be an uncommon mental state for experienced traders, and for newcomers who jump into the Wall Street game, but without it, players don't stay in the game.

Intellectual definitions of common sense can be found in all the dictionaries, but we are most concerned about is experiential common sense, the ability to sift through data--technical, political, forecasts, trends, memory, chatter, etc., and come to a decision to do one of the handful of basic market actions: buy; don't buy; go long; go short; hold; stop-loss; or sell.

Ego is the mortal enemy of common sense, for if we're motivated by ego's compulsion to be praised, applauded, and the highly regarded top dog, our lust for recognition and fame will forever be ridiculing and overruling common sense. 

Getting Ego out of the way is goal number 1 of sane traders. When Ego--false sense of self--is in control, some little--but crucial--factor will be overlooked or disregarded, or misinterpreted. Generals on the battlefield want to know the ego needs of their opponent because those needs may hold the key to unexpected victory.

Knowing yourself--what makes us think and feel, act and react in positive or negative ways--is key to success in the market. If we don't know what "gets our goat" and makes us over-compensate wildly, our score will hover around zero. If we're too easily embarrassed, we've lost control. If our temper makes us fly off the handle, we've lost control.

Common sense gives our work a light touch, so we aren't unhinged by success or depressed and paralyzed by disappointment and miscalculation. The light touch of common sense lets us rebound from both success and failure. Years ago, in graduate school, I came across another prime ingredient of common sense. In the article I was reading, a medical professional said, "Learn to look at your patient with eyes of analysis rather than pity."A market profession will learn to look at market conditions with eyes of analysis, unswayed by greed or one-upmanship, or revenge, or desire to teach someone a good lesson. Stay objective. There will always be pros and cons...and some risk. Common sense says, "Would I advise my mother to do this?"

Common sense observes and takes into account the laws of physics. What goes up, always comes down--sometimes in a briar patch. Common sense knows that what goes around, comes around--sometimes from our blind side. Common sense knows it isn't all given or all take. Common sense is balanced sense, and it knows better than to have false expectations that push one into precipitous decisions. Common sense builds trust. It never cheats and always gives value for value.

Common sense knows to buy low and sell high, despite the temptation to do the opposite. Common sense dictates hedging, off-setting riskiness with assets that don't surrender their value over the long haul. Common sense says, "Buy when nobody else wants to buy. It goes against the grain by selling when nobody else wants to sell. And when the market plunges toward a real bottom, common sense will know that all is not lost, and will act on opportunities to buy assets that will prosper in a recovering economy. Common sense looks like insanity.

Common sense understands that certain effects stem from certain causes. Cause and Effect is the Universe's agency of change, and common sense will stay focused on the Causal side and not become distracted by effects. What's causing the trend, the high, the low, the volatility, the excitement, the malaise, the over-supply, the scarcity, etc.? Common sense yields understanding, and understanding yields control.

To paraphrase a well-known scripture, "With all thy getting, get common sense, and get it first."