From a Day Trader.
1. It’s never about the money.
Every
day I get emails that say, “Can you show me how to day trade?”
No!
I know a thousand day traders and only two that won’t go bankrupt.
So what makes anyone think they will have an edge? How many people listen to
me?
Zero.
How come?
Because people are sick of their lives, their relationships, their
jobs, and all the lies that have been told to them ever since they learned how
to walk.
They want freedom from it.
I get it.
Day trading is the dream. You can make enough money to not care.
To do it from anywhere. To be happy.
It won’t work. But people don’t want to believe it. Most people
think they have that one special something that will make it work for them.
And it’s true – they do have that one special something. But you
can’t get there by day trading first. You can skip right to the being happy
part. You can skip right to being free.
2. It doesn’t matter if a trade (or a day, or a life) is good or
bad.
Good
and bad days happen. But life is about a billion little moments that add up to
all the things around you. If you let one of those moments have too much
control then you are bound to be mostly miserable.
I was mostly miserable during the period I was day trading. I let
that aspect of my life take control. So I stopped focusing on being a good
husband, a good father, a good friend, a good anything.
All of my other constituencies went to hell.
I would have nightmares. I would lose sleep. I would wake up many
mornings and go to the church across the street so I could be by myself and
pray. What would I pray? “Jesus, please make the markets go in my direction
today.”
I’m Jewish. Nobody answered my prayers.
3.
“This is crazy” means you’re crazy.
I’ve seen it a million times. A guy makes a trade. The market goes
against him. He says “this is crazy” and puts more money into the trade. And
then he loses all his money and goes crazy. I’ve had to talk people off the
ledge or tell them to put the gun down.
The market is never crazy. The world is never crazy. And I will go
so far as to say that your girlfriend who just lied to you about where she
spent the night is not crazy.
I only care about you. And you’re crazy if you thought the world
was going to line up any other way than the way it lined up.
Tough on you.
I know when I feel like a situation is insane that the first place
I need to look is at me.
4.
Laughter.
The only way to survive is to laugh. There's that saying,
"Man makes plans and God laughs." Well, you might as well be on the
same side as God.
5.
Health.
Day trading pulls everything out of you. It sucks the soul out of
your body, blends it up, and then explodes. It doesn’t turn into a nice
smoothie. It explodes.
So
you have to take care of yourself. If you don’t sleep enough, if you don’t eat
well, exercise, be around positive people, be grateful for what you have, etc.,
you will lose all of your money and go bankrupt.
And obviously, this applies to everything else in life. Every day,
what small thing can you do to become a slightly better you?
The reason we get so attracted to cubicle jobs is that the pain is
more subtle and sneaks up on us. It’s not the blender-drama of day trading, so
the need for health on a daily basis doesn’t seem as important. But it is.
6.
Say “no.”
In day trading, if something is not working out, even if your
heart wants it to work out, you have to say "no" and cut your losses.
If
a business relationship is not working out, don’t put more energy and time into
it.
There is a cognitive bias called “committment bias.” We think
because we’ve already put time and energy (or money) into something that we
have to stick with it. But this is just a mental bias. Say no to it.
You have to decide every moment if this is the situation you want
to be in.
Just because you were in the situation a moment ago, or yesterday,
or for 10 years doesn’t mean the situation is right for you anymore.
7.
Diversification.
Often I get emails that say “I really want ONE job but they don’t
seem to want me and now I’m miserable. How can I get that job?”
Well…you can’t.
And you’re going to be unhappy. You can’t wish yourself a job.
When
I was raising money to day trade, I probably contacted over 1,000 people. When
I was starting an Internet business, I started over a dozen Internet businesses
and watched all of them fail but one. When I was trying to sell my Internet
business, I contacted over a dozen companies (although Google broke my heart –
damn you Google!).
When I wanted to get married, I went on a lot of dates. This
woman, Claudia, had an approach that was even smarter--she wouldn’t waste time
with dinners. She would only go to tea with guys. Within the first 20 seconds
you know if you are attracted. So keep it to a tea.
8.
Taking risks versus reducing risk.
Some people take too many risks and go bankrupt — this happened to
me. And sometimes people are too cautious and don’t take enough risks.
When
I first started day trading, I was so afraid of risk that if I had a small
profit, I’d end the trade. But then I would take big losses and that would wipe
out all my profits.
The key is that you can take larger and larger risks if you work
on better and better ways to deal with those risks.
For instance, I might be able to risk marrying someone if I know
she is not a hard-core drug addict who regularly betrays the people she is
close to.
I can risk driving without a license if I always stay below the
speed limit (I know this is a stupid risk, but still). Once you have a method
of reducing risks, it’s easier to make trades or decisions about anything.
9.
Uncertainty is your best friend.
All opportunities in life are created because people are uncertain
about almost everything in their lives.
We are constantly trying to close the enormous gap between the
things we are certain about and the things we are uncertain about, and almost
every invention, product, Internet service, book, etc., has been created to
help us close that gap.
Sometimes this is hard. If your husband betrays and leaves you,
you often feel like crawling on the floor and burning all the self-help books;
they all lied.
It’s hard to feel in the now or to think positively when life
feels like it’s over. I’ve tried. For me it’s too hard.
But at the very least you can
say, ”help me.” You can say it to your close friends. You can say it inside of
yourself.
“Help me” is the most powerful,
and most forgotten, prayer.
10.
Hope is not a strategy.
If you get to the point where you hope you don’t get ruined, then
you did something wrong beforehand.
For instance, if you plan a wedding outside and you don’t have a
backup plan in case it rains, then you probably misplanned your wedding unless
you're getting married in a desert.
Hoping is not a bad thing. I hope every day my life goes
perfectly.
But if hoping is the only thing
I’m relying on, then it means I didn’t really look at all the possible outcomes
of something that was important to me.
11. You can’t predict the future.
Everyone thinks they can, but they can’t.
This
applies not just to trading, but to everything. You could be married for 10
years, and the next thing you know, you're divorced.
You could be healthy all your life and eat your vegetables and
exercise and reduce stress, and a year later you could be dead from cancer.
You’d have much less stress if you let go of trying to predict the
future.
But you can always seek to increase the odds in your favor. If I
don’t jump off bridges, for instance, it’s more likely I’ll be alive a year
from now. But certainly a path to unhappiness is thinking the future can be
predicted and controlled.
