When it comes to the markets, making decisions is the name of the game. I cant even count how many decisions I have made over the last 20 years about long, short or out. When to get in, when to get out, up, down, bull, bear, Bonds, Equities, Grains, Metals, Energies, Stocks, now Currencies…so many decisions on what to do, how long to hold, how long not to hold; Maddening right? Not really. I have made some not so pretty decisions along the way, but I’ve made some pretty good ones down the road as well.
One decision I made back in June 1997 was to start trading for myself. I have been trading since 1993 but I had the cushion of a salary each week that went along with my job in the beginning. Nice perk at the time!. Not now; it was all 100% up to me whether I made money or went home broke. Pressure is on! Seat lease, Commissions, Clerks, Mortgage, Car payments, Food, Leisure, Bills, Bills, Bills and not even trading yet. You don’t go to work now; no paid vacations; no money in your pocket. The pressure of it all hit me one day when I started selling bonds in an area where I told myself I wouldn’t and I lost $1000 (not much in trading land) but we all don’t have multiple stacks of $1000 bills laying around.
80% of the total loss was totally controllable and totally avoidable. I originally liked the idea to short bonds that day but said if it climbed past a certain point I would get out. Yes, I began to sell in the area above the point where I told myself I wouldn’t. Not only did I do it, I held it and compounded the problem by adding to it. I didn’t want to admit my loss which would have only been $200 but I didn’t want to lose as my brain also remembered that the car, mortgage and vacation payment on this months list of bills was due. I cant afford to get out and admit the mistake, which had now climbed to $1000. Something in me that day had enough (not the loss) but the thought of doing something I told myself I shouldn’t have done aggravated me enough to finally shift my thought pattern. It was painful but I took the pain and got out.
I knew that the market was going to put me in this spot again so I better get used to it! The answer was simple don’t do what you told yourself you weren’t going to do. Simple right? Well in the emotional roller-coaster game of high stakes money, it ain’t so easy because it is the number one killer of 95% of you aspiring traders. So on that day in June 1997 I made a commitment to not sell/buy in an area where I told myself not to. Nobody can show you how, you have to do it and just commit. Forgive yourself no matter what the result would have been, could have been or should have been. Right now; its bad so end the pain!.
That decision is the number one reason I am still able to trade, teach and be my own boss today. We all know how to win but in this game you have to be a great loser! And that is what I have become; A GREAT PROUD STANDING TALL, ADMIT MY BAD IDEAS LOSER! When I get out of these bad ideas and don’t add to them, it’s such a rush. Not only for my sense of control but it improved my bottom line dramatically for the better in the end. If the washer and dryer broke down, heat/air conditioner broke down or the mortgage was due, I now had rainy day money. That one simple decision and committing to it reduced the overall stress in my life immediately.
When this thought hit me about decision making it reminded me of a student I began mentoring. This client was a tremendous money earner over the years playing Futures on the Dow Jones Industrial Average (a.k.a “The Dow”). She got in a rut awhile back and asked for my help. I sat with her and began asking some standard questions. We revealed tremendous winning streaks only that were destroyed and wiped out with one blow up day. Rome built in 10 days and destroyed in 1 so to speak. This might sound familiar to some of you. Its everybody’s problem. We all know how to win, but not all of us are good losers. For those of you on the path of trading the markets say it with me once; “I want to be a great proud standing tall admit my bad ideas loser. Now if you want to survive and thrive in this business, you need to say it and shout it to the rooftops so everybody can hear you, “I AM A GREAT PROUD STANDING TALL ADMIT MY BAD IDEAS LOSER!”
As my Dow trader was going through my mentoring program she called me up one-day in a panic and asked “what did I think about the Dow that day”. She was short and I knew the market was rallying. I didn’t even have to look at the charts once she told me she was short (selling). Her voice told me what was happening. You guessed it; the Dow was soaring higher! Melt-down day; well for her. I told her the S&P500 was rallying, the NASDAQ and Russell 2000 were rallying. She didn’t want to hear it. She was caught on the wrong side and I said “I think its going up, I would admit the loss and cover the trade”.
She said I’m going over to ask my other numbers guy; “You Suck”. Her other numbers guy happened to agree with her viewpoint on the market. Uh oh, trouble, now she had somebody to soothe her thoughts to continue to hang with this bad idea. She was all over what this guy had to say. Smirks flying my way all while I watched prices continue to climb. I get it, I fired back; you ain’t listening to nobody unless they agree with you. Anybody ever get in that mode? She continued to short the market and needless to say prices soared and her account got slammed that day!
I’m not here to beat my chest and tell you in this article that I told her so, because I could have just as easily been wrong in my prediction. In the aftermath when we met again I just wanted to explain to her and help her realize and remember the state of mind that she was in when she first originally called me. She was in a panic, right? That was the sign! She didn’t need to call me; she already knew the answer. When you are in a panic situation, GET OUT! ITS MORE LIKELY THAT ITS GOING TO GET WORSE!
Where there is smoke, there is fire. I even learned that lesson as a kid. Literally one day are neighbor woke us up at 2AM and told us the house was on fire and said get out! I look out my bedroom window and saw flames shooting over the roof. We got out and are still here to talk about it. We didn’t just go back to sleep and ignore it! You can even stretch this a little further with the crisis going on in Japan today. If you lived in the surrounding area of that nuclear plant and survived the quake, do you see those people sticking around that area? If they didn’t want to leave, they were evacuated whether they liked it or not.
Now I don’t teach life and death; I teach trade plans and risk management strategies for traders. Just begin to recognize what your body and mind is telling you, because it tells you all the answers you need to know. When its giving you pain, its telling you to do something different. Don’t prolong the agony, just rip that band-aid off. One of the most important things you will hear from me is to become a “GREAT PROUD STANDING TALL ADMIT MY BAD IDEAS LOSER!
Whatever you decide to try; you can’t win, if you don’t play!! Prosperity is at your fingertips! All you have to do is grab it!!
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