My friend Matt says that you aren’t trading right if you don’t leave money on the table or if you don’t feel like you missed something. Well… Then I’m trading right this week. I left a lot of money on the table. But I also did pretty well just taking profit when profit presented itself. Does it bother me? It does, although less and less every day as I see the small profits add up and know the time to let a trade run will be very obvious when it presents itself.
Three weeks ago I made the leap. I quit the steady job to run back to the world I love most, the one where I own my risk and therefore I own my reward. I have committed my time and energy to fully pursue being a strategic planner and risk manager in the FX trading world. (And oh ya, I picked up a hobby of actually pushing the buttons to go along with that job). I am full time now. I live and die by the trades I make and I wouldn’t have it any other way. It has been three weeks of drinking from a fire hose. More chart time, more required risk to gain more reward so my family can eat. New routines and new freedoms to go along with the increased responsibility and pressure. In short, I’m in heaven…
Have I made mistakes already? Heck yes I have! But I’ve also just finished my best week of trading in my entire career and I want to share with you the most important lesson from my week.
I want to talk about keeping money unemotional. That’s why I put the picture of the hammer and nails at the top of the page. It’s just an example of a tool but I want you to do me a favor real quick; think of a tool you use often. It could be a shovel for the garden. It could be a pen to write with. It could be a hammer and some nails. Now think with me about how you perceive that tool. Is it for pleasure? Does it add anything to your ego or your self? Does it keep you up at night when it’s in the garage, laying awake wondering if the shovel is getting any work done or not or if you have enough shovels to complete your project? I highly doubt it. I can’t think of one physical tool I have ever used that caused me stress by just thinking about putting it to work.
Now think about money. How do you perceive money? Does it add anything to your ego or self? Do you lay awake at night wondering if you have enough? Why? Why is it different? It’s not physical, its psychological. Money is paper, a shovel is wood and steel. On their own, a shovel is worth more than the paper you $100 bill is printed on.
Why the difference?
This is the question I had to struggle with all week as I took my trades off too soon almost every time. I am not emotionally tied to my shovel, but I am to my money. It’s got to change.
An article I recently read titled “7 Ways to Adjust Your Mindset About Money” (Click Here to read the entire article), the author explains our attachment to money this way:
Look at the effect money has on the way we view ourselves. To some degree, our sense of self-worth and security tends to rise and fall with our income. And regardless of how we reason on it intellectually, the truth is, we all have an emotional connection with money because we always feel better when finances are not an issue.
I agree with this. But I am learning that a huge part of trading for a living is detaching that emotional connection from the money in their account because if this mindset is allowed to continue, it keeps a trader from recognizing their full potential. Its stops being able to be used as a tool and becomes a measuring stick for self worth and we become afraid to lose it because if we do, what happens? We lose self worth. Money=self worth therefore loss of money=loss of self worth.
I’m happy leaving money on the table but I also want to make sure I’m using the tool properly because simply put, the money in my account is no different than the hammer and nails a carpenter uses to frame a house or the shovel a landscaper uses to dig the hole to plant a new tree. They are all tools. Put those dollars to work. Don’t get emotional about the trade set up, if its what you’ve been looking for, trade it. Trade it with conviction and if it doesn’t work, its like a carpenter bending a nail. Does she stop and sulk and get pissed that that nail, that tool, didn’t do exactly what it was supposed to do this time? NO!
Next week, get that next nail out of your bag and keep hammering. Treat the money in your trading account exactly like what it is. A tool that can produce more money. Don’t let fear or anxiety or lack of faith overcome the ability to put the tool to work. It must do work. That’s the only reason it was created. Let the tool work.