Which experience has a deeper impact on your unconscious?

 

• When you hear the warning "Don't touch the hot stove!"

• Or when you actually touch it and feel the excruciating burn?

 

Consider this: 

Once you've burned yourself on a hot stove, you become forever cautious not to repeat it. 

 

In trading, we observe a similar phenomenon. Oh yes, a significant loss in the markets that catches you off guard can be incredibly painful. It has the potential to paralyse your future trading endeavours and bring them to a screeching halt. 

Depending on its severity, such a loss can significantly affect your finances, take an immense emotional toll, and even disrupt your family.

 

This is precisely what happened to the elite traders interviewed in "Market Wizards." We'll delve into their stories in a moment. But first...

 

When you suffer a devastating loss, you might think to yourself:

 

"You need deep pockets to endure such hits" 

and/or 

"Wow! It takes real guts to withstand those blows to your account." 

and/or

You may know some other stories too. Agree?

 

And so you continue to follow the markets, craving the joy of trading. However, you find yourself merely scratching around the edges - never going into the field - due to the paralysing effect of that painful experience.

 

But it's not about 'guts' at all. Not even close.

Did you know the best traders, including the absolute elite showcased in the "Market Wizard" series, are fearful?

 

When asked to explain how he had such a big percentage of winning trades, market wizard Mark Weinstein replied:

 

"Because I have a real fear of markets... which has forced me to hone my timing with great precision... I also don't lose much on my trades because I wait for the exact moment."

 

You see: 

It often takes experiencing traumatic loss to truly understand - at a deep unconscious level - the dangers of trading. 

Before that, all you think about is how much money you can make, right?

 

In contrast, professional traders prioritise one thing above all else: how to avoid getting hurt.

 

And this isn't just about using stop-loss orders. Stop-loss orders only determine the amount you lose. They won't prevent you from experiencing repeated losses until you find yourself staring at a depleted account, accompanied by frustration and pain. Correct?

 

Instead, I'm referring to trading in a way that safeguards you. It requires specialised knowledge. And it also involves repetition to build trust in its reliability and efficacy. Make sense?

 

You regularly use a stove. It’s just you don't touch the hot plate.
 

Similarly, when you've endured pain and trauma in trading and possess the right expertise and trust in that expertise, you naturally believe that sticking to what protects you is crucial because deviating from it will lead to more pain. 

 

TL;DR

There's a way to trade that doesn't take guts or heroics. It's how the best traders operate. But the catalyst for tapping into this approach is enduring trauma and pain. 

 

If you adopt the right approach:
Then you can trade without needing 'guts' to initiate a trade while still maintaining a genuine fear of deviating from what's safe.

 

Further reading:

🔗 Trade in Your Anxiety and Hoping for Trading Conviction. A 4-Step Framework

🔗 Fascinating Discoveries About the Maturing Brain and How They Can Benefit Trading