A big reason trading is hard is it calls us to face some of our worst fears: fears of not just losing but being “a loser,” fears of letting others down, of not being good enough in general. Add to these the practical fear that comes when you’re trading with money you can’t afford to lose. Oh, the spreadsheet may say you can, but if your identity is partly tied up in your account balance, you really can’t afford it. We all make this mistake sometimes. We confuse our net worth and our self worth.
These fears sometimes cause stress reactions as strong as facing a divorce or a serious illness. Your stress hormones, your blood pressure, they don’t care that you’re watching blips on a price chart. To them, you might as well be facing a wild tiger. This happens even to multi-millionaires. Few things are sadder to see than an unhappy rich person.
If anything, it gets worse as your number goes up. If a trading loss means you’re temporarily no longer a “millionaire,” whatever that means to you, that can feel devastating. Same with billionaire–maybe worse since Forbes will make it public. And mature and sophisticated as you are, there’s a part of you that feels exactly like a little kid who just lost his favorite toy or got bullied in school.
The best traders often learn their emotional equilibrium from role models outside the world of finance. Athletes, artists. scientists, leaders of various kinds who have faced great fear and used it creatively to shape their character can be found everywhere if you look. And you must look. The true masters of money show mastery in life as well. They have unshakeable confidence and optimism. They follow what Rudyard Kipling wrote in his famous poem, “If you can meet with Triumph and Disaster/ And treat those two impostors just the same…”
My best training came when I spent three years after college in Kimitsu, Japan, studying aikido. At first, I struggled and felt weak and incompetent. I already had a black belt from my American school, but in Kimitsu I began to lose hope as week after week I couldn’t do even the basic techniques. When Watanabe, my usual partner, grabbed my wrist it was like being held by a stone statue. As I strained to move him even a couple of inches, I got angrier and angrier. Not at Watanabe, who was patient and encouraging, not at Sensei, even though he watched me with a wry little smile and offered hardly any advice. I was angry at myself and the world.
One evening, Sensei pointed to my head and said in his limited English, “You make enemy, here.” On “here,” he tapped my forehead.
Then he said, “No enemy!” pointing at Watanabe. “Just Watanabe. No enemy. No angry.” Then he added in Japanese, your spirit and his spirit are one spirit. So just blend with him.
I was so tired I nodded and, without any hesitation or plan, tipped Watanabe over and flipped him with one hand onto the mat. “Outstanding!” shouted Sensei.
When I was angry and determined to win, I was weak and powerless. When I let go of my anger and just blended with the situation as it was, I could throw much stronger men halfway across the dojo. And I could do it with ease and grace.
My power came from just blending with the larger forces at work.
Same with the markets. We get angry at them for not doing what they should do, for taking our money, for having some kind of vendetta against us. But the truth is, the market doesn’t care about me, it doesn’t know me, it neither loves nor hates me. It just is. My only enemy is my own attitude. Fortunately, my attitude, unlike the market, is completely under my control.
Try this: look for people outside the world of trading who face adversity with hope instead of anger. Who are relentless and brave in their optimism, even the when the whole world seems to want to break their spirit. My role model for this evening is Anne Frank, who wrote:
It’s difficult in times like these: ideals, dreams and cherished hopes rise within us, only to be crushed by grim reality. It’s a wonder I haven’t abandoned all my ideals, they seem so absurd and impossible to carry out.
I simply can’t build up my hopes on a foundation consisting of confusion, misery, and death. I see the world gradually being turned into a wilderness, I hear the ever-approaching thunder, which will destroy us too, I can feel the sufferings of millions.
I still express my ideals because I still believe, in spite of everything, that people are truly good at heart. When I look up into the heavens, I think that it will all come out right, that this cruelty too will end, and that peace and tranquility will return again.
Everyone has inside of him a piece of good news. The good news is that you don’t know how much you can love. What you can accomplish. And what your potential is.
How wonderful it is that nobody need wait a single moment before starting to improve the world.
I must uphold my ideals, for perhaps the time will come when I shall be able to carry them out.
This Memorial Day, we remember the fallen brave who found ideals to live and die for that were greater than their own safety and comfort. Greater by far than mere money. If we can hold to hope even when everything seems to be telling us to despair, then we master one of the great secrets of life. And suddenly, the blips on a stock or futures chart or ticker no longer seem worthy of our fear.
The markets are not an enemy. We just make the markets our enemy in our minds. We don’t have to “beat the market.” If we can give up that desire and just blend with them, we can master them with ease and grace.