Module 12 Innerworth — Mind over markets

Chapter 131

Transformed Through Adversity

You see your true self when you hit rock bottom. What do all newbie traders fear? Blowing out their account and having to start over, it is a fear that haunts them. But ask any seasoned, profitable trader about blowing out and they say the same thing: I’ve done it a few times and I’m stronger for it. It may sound like a cliché these days, but the only thing we have to fear is fear itself. That is not to say that losing hard-earned money is not difficult to handle. It is hard to accept huge losses.But if you can lose money and recover, you will gain a greater sense of confidence that will allow you to trade the markets with aplomb. Recovering from a major financial loss is similar to any challenge you have overcome in your life. It’s scary at first, but once you recover gracefully, even the most difficult problem becomes commonplace. You develop a new perspective; everything looks different.

Triumphing over adversity may transform your life, but it probably isn’t a good idea to blow out your account just to get it over with. There is some risk involved. If you lose money that you really can’t afford to lose, it could take some amount of time to recovery, if you recover at all. Some people never recover from huge losses in the markets. They just walk away and see trading the markets as something to avoid. And for some people, this may be an important lesson. There is definitely something to fear in losing money. It is hard to make money, and you definitely need money to make money.

These are the facts of life. The trick is to develop a new understanding of money. It’s necessary to see it as merely a vehicle for making additional money, rather than its real value. It needs to be seen as merely abstract ticks on the tape, but at the same time, you need to also hold the belief that if you lose too much money, you may not recover. It is difficult to hold these two seemingly contradictory ideas in your mind, but if you live through the experience of losing money and making it back, you will have a sense of confidence that will allow you to trade in a more carefree manner. You will have a sense of freedom that will allow you to look at the markets more freely and creatively.

If you’re like most people, you should be thinking, “How can I take a loss of thousands of dollars in stride?” It won’t be easy. You need to learn to define your sense of self apart from your account balance. Expert traders learn to appreciate what they have. For example, they learn to appreciate that their friends and family don’t leave them because they blew out their account (or if their family and friends would leave, they have a problem, and better find a new family and friends). They appreciate the fact that should they ever end up with little money, they can still find a way to support themselves in terms of basic living expenses.

They learn to see a nice car, flashy clothes, and a house in a fashionable neighborhood as not truly necessary for a satisfying life. Most people don’t think this way, and that’s why they can’t take losses in stride, and instead, live in constant fear of losing. Their definition of who they are is based on possessions they cannot give up. But if you want to trade the markets with freedom, you have to learn that money, and the status symbols you can accumulate with money, are ultimate of little value.

It’s tough and counterintuitive, but perhaps the only people who truly learn to develop a sense of security with trading the markets are people who realize that money and possessions don’t buy you real security. You need to find such support elsewhere. And once you have it, you will find that you have rock-solid confidence that is hard to overthrow.

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