What money means to you psychologically

Cheese, thank you very much for responding and providing the correct answer – “little or no money”.

This thread is researching ‘pulling the trigger/fear of trading/failure’, subjects repeatedly posted here on EliteTrader and other forums.

Quotes are from an article authored by Paul Counsel and is all I found on the web written by him.

Personally the ‘what money means to you psychologically’ threw me for a loop when I first read it — as did your answer. Elsewhere others have related their loss/trading experience in answer to the question, but haven’t answered the question as succinctly and I think as accurately as you have.

While this simple answer ‘little or no money’ now appears obvious, it seems to me the problem is that relative to their personal wealth, those individuals experiencing trading problems haven’t answered or even considered asking what amount ‘little or no money’ means to them, what amount of loss would reduce their wealth to ‘little or no money’, and were it to occur, how would loss of their money/wealth affect them.

Some/most/all individuals won’t know the answers until experiencing a loss or series of losses sufficiently large enough to hit their personal ‘little or no money’ level. Whether or not losing traders become financially bankrupt, they are “on the mat and shell-shocked” — psychologically bankrupt.

The common problem for many such traders is being unable to continue or to re-start trading.



So Cheese, et al, having been hammered in such a way, how do traders recover from such psychological trauma and begin trading again ?





The full article ‘Towards an understanding of the psychology of risk and success.’ is attached and appears here: http://propertyinvesting.com/psychology.html

Paul Counsel has written and published ‘The Infinite Wealth Trilogy’ available here:
http://www.thewealthtrilogies.com/new.html I haven’t read the books nor am I an ‘associate’ promoting the books.

60 minute audio interview of Counsel:
http://www.marktse.com/recommend/millionaire-audio.php

 

Before I started trading in February 2006, I've been mostly researching S&P500 by observation, reading as well. I have tried trading via a spread betting firm applying my strategies using a small account size (maximum $2000). My interest has always been in short term index futures trading, therefore I only used to bet on the price of index (intraday). Spread betting, similar to trading in most aspects apart from wider spreads though no income tax involved on winnings, I used to place bets risking 30% of my account minimum and ALWAYS used to get wiped out, because the last trade used to involve 100% risk at risk vs reward around 1.5:1. In total I have lost around $15,000 during the last 5 years, BUT what a lesson that was!

My past losses did affect me at the time psychologically, I thought I was a complete idiot. The truth of it was very simple though. I am only mentioning this for people very new to trading, risking 100% of your account EVEN on the most SAFE trade and/or to recoup previous loss/es IS A PRACTISE THAT LEADS TO FAILURE ALMOST 100% OF THE TIME.

I will never have this approach to trading again. Unfortunately, the law of averages suggests that the majority of people will go through this process and some will never recover. I was lucky not to use all my net worth before, probably that's why I am still here and hopefully will make it as good trader. I think it is almost impossible to recover psychologically when 100% NET WORTH has been lost, for most people.

 

Great read Wallace....really like the post content.

As i mentioned to you in a PM i have a background in fighting/boxing. As a fighter one of the most significant stumbling blocks to a fighter can be attaching your ego to your ability. It can be absolutelly debilitating to go into a fight with expectations attached. As a fighter your become a much greater fighter when you just fight with the best of your ability the outcome be damned. I have to wonder if thats why "underdogs" do so well and you see many performers who are expected to do so well....choke.

Bruce Lee a great fighter used to harp about fighting with no ego "no mindedness" i think was the words he used. In essence it was detaching your skill from your ego and all the other expectations and just let go....put your trust in your training and skills and let go.

I think there is a similar relationship to trading and investing as you brought up so far. At some stage, me included and i should know better, we start attaching expectations to our performance. We think were smart and expect to do well as traders or we want to be thought of as smart because were succesfull traders, we want power, prestige, material items.....the list goes on and on......we can begin to relly on being, continuing or becoming succesfull traders to fullfill these things that we hold as so important. I think at that point we actually can hurt and begin to debilitate our performance.

As traders i think we should be traders because we love it and have a passion to trade and invest....period. Great athletes become great performers really because they trully love what they do.....the "riches" come from their skills that were sought through passion. We've all seen these examples a million times. We all know that trading can be very rewarding financially and that may be reason enough to begin trading but i'd be willing to bet that a great and financially succesfull trader made it because they really loved it and thats what kept them going through all the heartaches along the way.

I think were trading and investing differs is that some of us with little or no skill can have lucky streaks that can appear succesfull and from a $$$ point of view can be rewarding and misleading. When things don't continue to work and success dissapears...if that trader has attached expectations to that success it can really hit home psychologically and shake that persons beleifs...really hurting their performance. Obvious but still i think alot of us do this and suffer this affect.

I like what Cheese wrote as well.....you really have to be happy with what you have or dont have.

 

If you look both sides of the bill you'll see the White House in one side. What does it mean? It means Power.

 

Someone wrote to me:
“I will assume in this case that their fear of trading has reduced them to poverty... ”
I think the quip goes to the emotional/psychological heart of the loss reaction. It’s not so much ‘fear of trading’ as ‘fear of losing money’, abstractly — ‘fear of poverty’, a rather absolute state to be in, a terrifying thought one may be reduced to that state.

I tried the NLP technique ‘Eliminating Fears and Phobias’ and found it worked very well, did a little research into using NLP to cure the ‘fear of trading’ thinking similarly easy self-help techniques would be available. Based on expert opinion a whole program is required as well most likely the assistance of an NLP trainer. One is tho likely to become a better overall trader since one’s examining and rebuilding so much of one's modus operandi not just curing the ‘fear’.

Thanks for your contributions.

For those interested I’ll post an ‘Eliminating Fears and Phobias’ pdf on a new thread.

 

I concur with the person who wrote it is a way to keep score. Nothing more. Profits and losses are just feedback for how well I am trading. The goal is really to trade making pure market decisions rather than financial ones.

Although in the short-run it is not true, in the long-run, the more I make the better trading decisions I am making.

 

Did you post it anywhere @ ET?

 

Money......hmmm, money?, mo-money?
its frightning out there...........:eek:

 

everything is money, money is not everything
money is everything, everything is no money..

 

Money only means one thing to me and I can put it in one word. Security. However, despite being just one word, security takes on a large role in life.

Its easy to live like a poorman when your in your teens and twenties. As you get older, it becomes increasingly harder to make the same sacrafices and your responsibilities seem to snowball with each year.

Security in your teens and twenties isnt so much an issue. With each year over 30, it becomes a much larger and diverse issue. Money doesnt seem to matter much when your 23, but when your 33 or 43 or 53, you see it as a security blanket. You need it to take care of your family as well as yourself.

While money is not happiness, it assures me that my family and I will enjoy a future with a roof over our heads and food in our mouths. It assures us of transportation and general well being.

Thats what it means to me. It doesnt mean happines, but it means security. Having and holding a secure lifestyle is very important and goes hand in hand with being happy.