…continued from Tonys Story Part 1
A few days of introspection
When I had the epiphany that I was no more likely to win a trade today as I was the very first day I attempted day trading, I asked myself some other hard questions:
- Why do I want to do this so bad?
- Why have I not seen the success in trading that I’d seen in other parts of my life?
- Why is trading so emotionally consuming?
- What causes me to do the things I do when I know I shouldn’t?
- How can I have so much information and yet have no confidence in it?
Why do I want to do this so bad?
Initially I think I had some lofty dreams of making an easy $500 per day to get started and work my way up to at least $1000 a day. So that’s where I set my goals. I was determined to do it within 6 months or less so I better hurry. THAT became the foundation upon which I was going to build my success. I mean, you’ve gotta have goals right? And everything I was seeing on the internet said I could easily do that and MORE!
But eventually, I had to lower my expectations because I was finding it difficult to even have consecutive winning days. Consecutive losing days was pretty common though. In fact, I realized at one point when I was beginning my trading day, that I was excited about the prospect of having a winning day but was honestly expecting to lose again that day like I did MOST days. Don’t get me wrong. I WANTED to win. I just didn’t expect to. It wasn’t long until my goal for a day was to try to win back as much of my losses as I could. I’d even double or triple my trades in case I got lucky and had a winning trade. No rhyme or reason why or when I’d do it. Just random times. Sometimes it worked in which case I felt like I was a bulletproof genius. Oh what a wonderful feeling that was. Most times it didn’t work though, and I felt like an idiot… AGAIN.
So with lowered expectations and with trying to be honest with myself, why did I think I want this so bad? Is it because of the money? The prospect of “EASY” money? Probably initially it was but I honestly didn’t believe that was possible anymore. So why was I still doing it? The honest answer was that I KNEW I could figure it out and it would not beat me. You see, as a construction business owner, my job was to be a problem solver. All day, that’s what I did. People called me to fix a problem they had at their homes. Employees and subcontactors called me fix problems they had on the jobsite. Office staff had problems with CRM software or an old printer that didn’t work right. Suppliers would call me with delivery problems. The list was just never ending. I considered problem solving my strongest skillset. Yet, I could NOT solve this problem I had of continuously being a losing trader day after day. I just couldn’t stand it. Not just because I couldn’t fix the problem, but I was losing lots of money at alarming rates which was also eating me alive inside. You try to rationalize that each trade is just the cost of doing business. But there just seemed to be too much cost. I needed to prove to myself I could solve this problem and get my money back. I’d worry about the consistent regular income sometime after that.
Why have I not seen the success in trading that I’d seen in other parts of my life?
I can point to 2 things in my life, besides my personal relationships, that I felt I was most successful at. Business and sports. It’s funny sometimes how one Ah Ha starts to open the doors to other Ah Ha moments in your life. Why had I not seen success in trading? Because I wasn’t approaching trading the same way I approached the other things I’d been successful at. Trading was something I was continuously trying to LEARN. To gather information about it. To listen to those that had more experience and what I thought was more knowledge.
Let me give you an example of how I would handle things differently in business than I did with trading. When I decided to start a construction business it was to get out of an office job that I really disliked. I had built a couple of really nice decks on my house, and I really enjoyed the process and the sense of accomplishment like nothing I’d ever done before. I decided that that’s what I wanted to do and quit my job and started a deck building business. I started running ads and began booking some jobs. I was a one-man operation doing everything myself and having a great time. One day while I was working alone eating lunch, I looked at the fence surrounding the yard I was working in. It was a wood fence. It occurred to me; fences are basically just decks built sideways. It takes all the same tools and effort to build wood fences. I think I’ll start building fences!
That night I went home and ran an ad for wood fences. I had never built a fence in my life, but I KNEW I could figure it out. I wasn’t going to go work for another fence company to learn to build fences. I was just going to do it. I got some calls, booked some jobs, and now I HAD to build a quality fence for my customers. I WAS ACCOUNTABLE TO THEM. If I didn’t do a good job, I’d have to give the money back or rebuild the fence at my own expense and I wasn’t going to let that happen. No matter what, the first fence I built was going to be perfect…. And it was. What was the difference in the mindset? I was accountable and it was now my job to do it successfully. I had no fallback option. I had no other income to support me if I didn’t succeed. Eventually the fence business took off and the more experience we got, the better our profits.
I tell you this story because it’s going to come up again. This story was a catalyst for something we’re going to talk about a little later.
- Why is trading so emotionally consuming?
During this period of introspection, I really thought a lot about how trading made me feel. Most of the time, it was like I’d been kicked in the gut. I was hurt, angry, sad, frustrated, scared, panicked, elated, thrilled, impulsive, withdrawn, and confused most of the time. I read and heard many times that I must trade like a machine without emotion. I must shed all emotion and just follow my trading rules to the letter no matter what. And I could do that… for a while. I could go several days or weeks trying to be disciplined and sticking to the rules of whatever the trading system du jour was. But the wheels always came off at some point. I’d drive my trading right off a cliff and start making the same mistakes I’d always made and usually compounding them and make them much much worse. It felt like I had all of the screw ups inside me that I had to get out all at once. And then I’d beat myself up for it….WHY DO I DO THIS?? YOURE AN IDIOT. YOU’RE THE WORST TRADER ON THE PLANET. YOU HAVE NO BUSINESS DOING THIS. YOU SHOULD JUST QUIT.
So, I decided to figure it out. What was making it so hard for me. Surely there’s a source cause. Trading is, in its parts, very simple. Why was I struggling with my emotions so much? Of course, the answer was pretty simple. It wasn’t just how I felt about losing. Or how I felt about being unsuccessful. It was because of one thing… MONEY. Oh My God. MONEY MAKES ME DO STUPID OR IRRATIONAL THINGS.
If I thought about every single emotion I had while trading, or even thinking about trading, each and every one could be traced back to money. What feels better than winning a bunch of money? What feels worse than losing a bunch of money? How scared are you when you’re not sure if you’re going to win or lose? How excited are you when you think you MIGHT win money? Money, as it related to trading, absolutely consumed me. Every tick of price movement was emotional. One tick in my favor, elation. One tick negative, fear and panic.
Even though it seems pretty obvious now, it was somewhat of an Ah Ha at the time. I had developed a particularly unhealthy relationship with money. It had completely dominated my thinking, emotions, and actions. Before my epiphany about money, I had tried to convince myself that
- Trading maybe just wasn’t for me because of some flaw in my personality
- I was just not cut out to be a trader because I was unable to manage my emotions
- I wasn’t smart enough to be a trader
- The markets hated me
- The markets were fixed
- I’m trading the wrong things
- I’m trading the wrong time of day
- I should be using an auto trading program
- And on and on and on…
But it was only my relationship with money and Believe it or not, this shift in thinking about money began a series of events that ultimately turned things around for me.