Trading Like There's Nothing To Lose
Have you ever felt intimidated by the markets, afraid to take a risk? It's understandable. You may have a lot to lose. Not just money, but also your pride, feelings of worth, or your reputation. The strain of keeping up appearances can be a burden at times. But the most successful traders are people who aren't afraid to take risks. The old adage says it all, "You have to risk money to make money." This truth of the trading world is often easier said than done, however.
It's common to hear tales of rogue traders who aren't afraid to take a risk, especially new, young traders. Why are they fearless? Perhaps they have just started out. They are innocent and have no firsthand knowledge of how tough, ruthless or unforgiving the trading world can be. They get on a roll and they make huge profits. It's bound to end, but while they are in that naïve euphoric state, they believe they are every bit as good as the most famous Market Wizard.
As a seasoned trader, it's often useful to think about the motivating image of the naïve, enthusiastic, young trader with nothing to lose. What's the harm? There's nothing to fear. You have well-honed trading skills, and a wealth of experience. You know how to manage risk, and by now, you should have enough capital to live a little, and lose a little, without being harmed too much. Don't do anything rash like take poor setups, but loosening up a little can help you regain your winning edge. It can be highly motivating to merely cultivate the enthusiasm of a rising star where the future in front of him or her is full of possibilities.
Why are we afraid to take risks? A big reason is the results-oriented society we live in. There's another old adage coined by Vince Lombardi that many seem to live by: "Winning isn't everything; it's the only thing." Instead, we are better off remembering, "It's not how you win or lose; it's how you play the game." Did you see Sam Keller, a young quarterback at Arizona State University, last Saturday as he tried to beat nationally ranked USC? In a sweltering stadium in Phoenix, Arizona, Keller tried to take on last year's Heisman Trophy winner Matt Leinart, Reggie Bush, LenDale White and the rest of the Trojans. When you watched Keller play, you could see he felt that he had nothing to lose. He was an underdog trying to show everyone what he was made of. A sign in the crowd summed up the situation well, "Matt Leinart, Who? Sam Keller for the Heisman Trophy." He just threw pass after pass, almost with wild abandon. He threw a few interceptions, and at the end of the game, he and his team looked defeated, but how should they have felt? It's all a matter of perspective. He and his team actually won more than they may have realized. They put a big scare in the Trojan fans, making them believe for an afternoon that their hopes for a third consecutive national title were dashed. In our results-oriented society, we forget that it isn't short-term results that make a difference, but the experiences you gain, and how these experiences impact the long term. Sam Keller felt what it was like to play a championship team and almost beat them. He may be a little less naïve, but at the same time, he probably has a deep sense of confidence. The experience made him grow.
It's just like trading. Maybe you made a bunch of losing trades for two weeks, but the experience is valuable. You faced the markets and you survived to play another day. The results oriented society will often make us feel beaten, but we aren't entirely beaten. With every losing trade, we learn something. Every day we spend studying the markets, we learn the subtle ways it behaves. It may not be tomorrow, or next month, but someday it will all pay off. If you work hard enough, study hard enough, and put on enough trades, you'll hone your skills to the point where winning is natural. Until then, approach the markets freely, as if you have nothing to lose.