Trade Your Way to Happiness

Practice is important. Basketball players don’t just play full basketball games. Instead, they prepare by running, or working on their jump shot, etc. Musicians don’t just play songs. They play scales, and do exercises to build their flexibility and dexterity. You can find examples of practicing everywhere. Practice speeds up our development by isolating a single principle and facing us with it rapidly and repeatedly.

Trading is Practice

I think that trading acts as practice for the challenges in my overall life. It isolates one of my most debilitating defects, and gives me an arena to face up to it rapidly and repeatedly. I’m talking about the root of greed and fear. I’m talking about control.

We’re brought up with the notion that we can and should be in control of everything in our lives. People ask us what we want to do for a career before we can tie our shoes. We go to school and are taught that it’s important to be right; we should have the answers. And, not only that, but we should have the answers fastest (the books don’t usually mention the third person to sail around the globe, or run a four minute mile, you know). Countless hours with television and magazines tell us how we should look and act, and how much money we should have. So, it’s no surprise that we form plans and expectations for our lives (and the people in them), and we have intense reactions at deviations from those plans. We have an internal script, and we struggle to keep everyone reading from it. We resist change.

We resist change, and this is a terrible choice, because everything is changing all the time, no matter what we try to do about it. Trying to control our world causes fear, and shame, and guilt. I felt guilty when I changed my major in college. So much so, that I waited until my senior year to do it. I missed out on several interesting courses as a result, and I don’t think I told anyone I had made the change until afterwards. I felt terribly ashamed when I filed for divorce. I had everyone’s expectations for me, and my own expectations for my life, rattling around in my head. I failed! Why couldn’t I make it work?

Make it work? Questions like that sound so natural, that we have to take a step back to realize how insane they are. People are constantly changing. Why should I expect to want the same career I wanted when I was 12? Why should I expect that I’ll never grow apart from my spouse, or never develop feelings for anyone else? Because I dressed up and said so in front of my family and friends? Please! And, those are just two examples.

Many of us have dreams and aspirations that we keep to ourselves… because the only thing worse than failing, is if other people find out about it! We are slaves to the opinions of others. If we can’t control everything, we at least want to appear to be in control. Especially since it usually appears to us that we are the only ones with problems, and everyone else’s life is perfect.

Trading Helps You Practice Letting Go of Control

Trading helps you learn how to address all of the above issues very efficiently. When you trade, you make your best judgment about the future direction of prices, and you place an order. In that instant, your whole world becomes about an irrational struggle for control. You stare. You sweat. You cheer. You concentrate, as if you can somehow mentally prop up the price. When the price moves against you, you somehow find a way to concentrate harder. You know you’ve done this, so don’t deny it!

When the price moves against you far enough, you only have one sane option as a trader. You exit. You admit that things did not go as you planned. Then, if you want to be a successful trader, you find the strength to let it go. Maybe the trade taught you something, and maybe it didn’t. But, you don’t carry the baggage of being wrong forward to the next trade.

Even when the prices go your way, the situation is not much better! It’s sad, but true. Do I exit the position now? Will it go further? If I wait will I lose my gains? I haven’t erased my loss from earlier yet! You still do not control the prices. You still have fear and greed. All you can do is make the best decision you know how to make, but somehow that doesn’t feel like it’s enough. Every now and then, when you have a string of wins, you start to think you have it all figured out. Then the markets always step in and remind you that it’s just not the case.

If you are a blogger, you get to tell people about the trades, and subject yourself to their judgment. People who blog know that it’s much harder to write up the entries about the losses than it is the gains. We don’t like to admit that things did not go as planned. We don’t like evidence that we couldn’t control the prices. Worse, we write up our wins as if we knew exactly what would happen, and we write up our losses with excuses about why we stumbled, and how we’ll avoid that in the future. But, both write-ups have a bit of falsity to them, because in both cases we didn’t really know anything. We didn’t somehow cause the win or the loss. We just made the best choice we knew how, and took what came.

And Practice and Practice…

So, you repeat these steps again and again. You keep struggling with this impossible goal to be right and control everything. At some point, if you keep at it, you will have sparks of insight. To me, this process is like pondering the zen koans. You know, those impossible-to-answer questions about things like the sound of one hand clapping? Zen students struggle and struggle with their koan until they are enlightened (at which point they are rewarded with another koan to struggle with…).

For me, some of the insights were: I am not my losses. I cannot control price action, and trying only causes stress. Telling people about my losses actually raises their opinion of me. I would rather be wrong sometimes than sit on the sidelines all the time. Yours will probably be similar, but tailored for you, and what you need to learn right now in your trading.

But–and finally, we get to the point of this post–, those lessons aren’t just for your trading. Over time, the repetition of these insights will start to help you deal with other situations. You may find yourself less aggravated at random annoyances, for instance. Or, you may stop beating up on yourself as much when you don’t succeed at something. It may seem like a bit of a paradox at first, but accepting that it is okay to lose doesn’t make success any less alluring or gratifying. In fact, it can make success even more full and enjoyable, because you aren’t carrying all that worry and fear along the way. It’s a much more fun way to live.

Financial Freedom? That’s nice, and all, but I’d rather Trade my way to Happiness.