Trading can be a tough job. Most people will never know what it’s like to go into work and lose money.
Being in control as a trader seems paramount. The job forces you to make decisions in spite of fear and against the current of greed. You have to learn to live in the moment, hone and trust your gut, and learn from every mistake. It’s a solitary job: its rare that you have anyone to share the hits and misses with.
Whether you’re up 5 figures, losing more than some people make in a year, or having the best year of your life, you have to keep yourself in check, and keep stepping up to the plate.
Day after day, the market is there. It doesn’t care if you’re stressed, anxious, overworked, or have 10 deadlines vying for your attention. It goes on. Every day billions of dollars changes hands. Our job is to find opportunities – mismatches in perception – that can be capitalized on.
When I set out to start my fund last year, I went through the range of emotions. The gauntlet beat me down in ways I couldn’t have anticipated. Anxiety, worry, sleepless nights, irrational fears: that people would abandon me if I failed, that I might destroy relationships I had worked so hard to cultivate, that I would be shunned or called a fraud or a failure. This line of thinking affected my trading adversely, and eventually culminated in a full blown panic attack.
The following is an excerpt from an email I sent to my friend Charlie Hoehn after reading his forthcoming book detailing his own battle with anxiety. Having worked closely with a number of high functioning bestselling authors, he knew a thing or two about hitting the wall.
“I had a panic attack once right around the time I was putting together my hedge fund. I started having heart attack like symptoms. I called my mom distraught and couldn’t figure it out. I described hopelessly, breathlessly all my symptoms and she talked me down.
I thought I was going to die, right then and there. My mind flashed to my poor father, who died alone on Mother’s Day morning in 2010. He was the one I used to call to relate my failures and successes, when I felt anxious or alone. I thought for a brief moment that I was about to join him on the other side.
I had been putting this fund and other projects together, grinding on for months, trying to analyze every possible angle and cover every base. I had worked out every horrifying detail of what could happen (everyone will turn on me if I fail, what if I get sued, what if I lose everything, no one will love me, what if I do really well and I’m still not happy– talk about a smorgasbord of negativity and bad energy) and worked myself so hard that I was ready to break. My body was finally overloaded and there was no going any further. My mind had turned into a hellish carnival ride of terrible things that were lurking around every corner and just waiting to jump out and tear everything down around me.
Then I had a chat with my friend Joe about fear and the role it has historically played in evolution. He reminded me that “there was no tiger” and no babies or puppies would be harmed because I lost money. It was just my body getting jacked up due to a fight, flight or freeze programming and its insidious effects compounded over time. It helped a little, but it wasn’t the whole picture.
Later I learned that everything (including right and wrong) is a perception we place on information, which is always imperfect. Things simply are what they are, and we assign value to them. The universe does not conspire with or against you. It just is.
This helped me stay in the moment and just make a bet (trade, choice, decision: whatever word resonates with you) with imperfect information, accepting the outcome in either case. By managing risk of downside, but not limiting our upside, good bets outweigh bad over time.
I later related this piece to a friend Brent and he broke into tears. Right then and there.
It floored me.
Something had clicked that he had been stuck on for decades- the need for every decision to be perfect, and the inevitable consequences of living outside the moment (past regret, future anxiety). An insatiable “need” for perfection had manifested like a cancer inside him. His marriage, job, and relationships had all suffered.
This grown man had been stuck in this limiting paradigm as a result of the way he was raised as long as I had been alive, and this idea had just set him free in five minutes. He went on to get a job making 7 figures in the following months at a major media outlet.
Needless to say, this was a revelation which further fueled my desire and passion on this subject.”
Trading methodology, as it turns out, held the answer all along.
A successful trader seeks not to be right. Wrong is also not in his vocabulary. A successful trader seeks instead to make bets, limiting downside but not upside. Any one bet does not a good or bad trader make. Over time, cutting your losses and letting your winners run, your good bets outweigh your bad. No one decision, or even a series, can cripple you if you maintain control of yourself and how much you put on the line in each instance.
As you learn more and your comfort zone increases, you are more comfortable and able to take more risk, knowing that your success over time is a quantifiable probability. Events might be mutually exclusive, but your responses to them are not. In other words, your odds of success increase the more bets you make and the more you learn. You have no control over the perceptions of others, but fostering control over yourself can help you to grab a bucket and fill it from the river, without getting swept downstream.
You must look at the markets as what they are: a river of perceptions looking to match with someone else’s to create reality. In this case the bid and ask are the banks of the river, and transactional data –people or machines voting with their dollars– create the flow of orders running through it. The only way to understand and navigate these waters is to internalize this.
The whole world can be viewed as perceptions seeking agreement, and creating reality.
I’ve used this probabilistic mindset in my own life, outside trading. Using this methodology, and extrapolating out over a long enough timeline, you will either:
Even death is not the end if you live on in the collective consciousness. Your words can live on without you. If you look at yourself as a part of a larger organism, you are actually helping the human race evolve by refining these paradigms and making choices.
It’s evolution in vivo. Your paradigms shift reality around you.
Conscious, creative, directed energy– moving toward a world you want to see — with a framework that allows someone to achieve anything, provided they can keep making bets. No one bet should have the potential to be your last.
It is my purpose to teach others this framework and share it abundantly, form tribes and solve big hairy problems, while focusing on better measuring sticks than just money, which is just an imperfect store of value being debased all the time. By instead focusing on assets, we can create abundance.
Learning that everything could be wrong (or rather everything is a mere shade of the truth) and assigning probability instead of arbitrarily seeking “perfection” helped tremendously in other areas of life as well.
Everything is a perception, or at least started out that way. It’s arguably only real when one or more person agrees it is. Also focusing on how I could make others successful (tribal mentality) instead of my own success was a huge switch for me.
How can you really fail when you live to serve others? Your own needs inevitably get fulfilled when you seek to add as much value as possible to others first. It starts with changing your paradigms, it ends with changing reality. True wealth is giving and receiving in abundance. You can limit your risk, but don’t limit your upside. Ask for help when you need it, and jump on opportunities when they present themselves, both to give and receive.
Charlie’s post about how he cured his anxiety went on to be read by tens of thousands of people. I’m very proud of his latest accomplishment and thankful that I have some new strategies to manage my own stress levels. I hope you enjoy his book when it becomes available, and feel free to reach out with comments.
Why am I so interested in this topic?
You see, I have this issue with belonging. Ever since I was a young kid, I was always getting bounced around from different friends and social circles. I felt like I never fit in, just an awkward sheltered kid. My mom was off working, my dad was crippled, and I had no siblings or strong role models.
I worked way too hard to feel accepted. It terrified me that new friends wouldn’t like me, and sometimes kids can be cruel. Like sharks smelling blood in the water, they picked on the younger and weaker kids like me. It taught me that I couldn’t trust anyone. It taught me that the world was looking to take advantage. These are still scarce and ultimately untrue paradigms I deal with on a daily basis decades later. I’ve sorted most of it out, but it’s my ‘dent’ ala David Deida. I will always, by default, act like a hurt child when I encounter feelings of not belonging. This tendency will increase when I’m burned out. I have to keep it in check by acknowledging it, or it will crush me.
This rears its ugly head constantly. I still throw myself into situations with the same level of ambition and optimism, and as soon as I feel like my efforts aren’t working as expected, or I don’t belong for some reason, I have this overwhelming urge to run away or do something else.
I acknowledge it and attempt to assuage it, both through logical means to conquer rational fear and some tactics to assuage irrational fear, which I’ve described above. I’m still on this journey, and I’ve by no means conquered all my demons yet, known or unknown.
If you say the world is scarce and competitive… or loving and abundant… guess what?
People who say they can and people who say they cannot are both correct.
Use the laws of the universe to your advantage, in all its infinite probability.
If you planted an orchard, would you plant one sapling and call it a day? Hell no. You would plant 100 knowing full well that some would die and some would thrive, but you have no way to know beforehand.
You also have to be careful not to drown in opportunity. You can only do so much, so accepting yourself unconditionally and respecting your actual limitations in time, energy and attention is important.
You have to learn to live in the moment, and keep designing a life you love to live, and by extension a world you love to live in. Perceptions seek agreement, and create reality. Everything around us– planes, trains, cars, buildings, even entire cities and countries — are an example of inspiration and perspiration creating reality.
People made the world what it is, just like you and I, and people, just like us, will make the world what it is tomorrow.
It’s up to us, right now, to accept the risk and responsibility of being alive, both in our careers, our relationships, and the world around us.
It’s up to us to tend to our own orchards, and fight the urge to slash and burn every time the devil rears his ugly head.