Learn This One Skill And Save $1,000s…
Quick! Answer these questions.
Should you buy stock in Pinterest right now?
Is Uber up or down?
Slack just had their IPO a few weeks ago, and it’s been rocky, but they’re on an uptick – how much do you want today?
What’s the answer?
You’ve got two seconds – GO. Make a decision! People are waiting, and you’re losing money!
OK, let’s be honest…
How does that kind of thing make you feel?
Forced to make a decision?
Probably so, and if that’s the case, then GOOD. That’s just where they want you to be.
Who’s they? Well, just about everyone on Wall Street.
These folks – brokers, traders, and the like – want you to feel on edge and slightly out of control every time you make a decision.
Manipulation Of Emotion
Why’s that? So they can be sure that you’re trading from a place of emotion. You’re not thinking with your head, instead, you’re being pulled by your heart.
This swell of emotion and the actions that come with it are good for them. If they can get you emotional, they can manipulate you.
And if they can manipulate you, they can make you do exactly what they want like a marionette on strings. In no time at all, they’ll have you making the decisions that make them a profit.
When they can do that to enough people, that’s when they start making money – big money.
The good news? This kind of manipulation can be defeated.
In fact, when you know about it, you’ll be able to flip the script and use it to your advantage instead.
My Time On The Trading Floor
Here’s a quick story. When I was a younger man, I took a few classes in trading when I was in college. Just a few days in, I was hooked. In fact, I left my big plans of an MIT engineering degree in the dust because I found the stock market too exciting and compelling to ignore.
Come graduation time, I was hired right away, and plopped right into a trading floor. I had direct lines to all sorts of authorities and companies, and instead of going through a lengthy onboarding process, they basically showed me my two phones and how all these phone lines worked, and then they said, “Ok, now trade.”
I realized this one thing really quickly – nothing I learned at MIT taught me how to trade. While I’d had classes in logic and math and all sorts of scholarly topics, at the end of the day, it was just me, my phones, and my decision making abilities.
In this same office, other traders had distilled their experiences down to aphorisms and then posted them around their cubicles as reminders.
Sayings like, “The trend is your friend,” “Buy into bad news, sell into good news” and “Don’t get emotional about stock” (which is, by the way, a great quote from the character Gordon Gekko) dotted the desks of my contemporaries.
And while all of those lessons are important, it’s the last one that strikes me as the most important takeaway of all.
Namely, don’t make decisions in the heat of your emotions. This makes perfect sense in every other area of life, why wouldn’t this also count for trading decisions, too?
Some of my coworkers would even say if they’d had a fight with their wives the night before, they wouldn’t even come to work that day, because trying to trade when you’re run by your emotions is a recipe for disaster for anyone – even professional traders!
See, when you’re in that state, you’re not thinking logically.
Your rational mind takes a back seat, and your ego, finally freed via that neurological pathway called emotion, decides it’s in charge and it knows exactly what to do next.
The bad thing about that is the ego is right a lot less often than the logical part of the mind.
The good thing is that the ego is not necessarily in charge all the time. Your rational mind can take over and make the good, calm decisions that will make you more and help you live a better, happier life in the long run.
Never Try To Fight The Market
If you react from a place of emotions, assumption, and hubris, the market will humble you. You’ll quickly learn that it’s not all about what you wish would happen – it’s about cold, hard, facts.
You must go in with a plan and stick with the plan. If you see a trend and decide you can buck it, go ahead and dispel yourself of this notion. See, you can’t fight the market. Well, you can try, but the market will win and you’ll lose – every time.
At the end of the day, the market isn’t about research and caution. It’s about knowing yourself, knowing your emotions, and knowing your limits.
Do yourself a favor and put in the work to find the thresholds of your logical and emotional boundaries. In both trading and daily life, find the edge of your rational decision making process and then back away from this edge slowly instead of flirting with danger until you do something stupid.
Remind yourself to make decisions based from a place of fact and logic instead of histrionics and overwhelm.
Once you can reach this peaceful mindset, you can then make only the best decisions – ones that affect your bottom line and your family for years to come.
See you tomorrow,