Your feelings around losing money

Hi folks, happy Wednesday. So I got an email saying effectively through about 45 minutes worth of text, it was definitely a TL;DR scenario but I did my best. The author of the email said effectively, I’m afraid to lose money. I don’t know why that is. The money is incidental. It must have to do with the feelings around losing money. Right? A lot of people, their family, their parents, especially put a lot of pressure on them to be right, to be smart, because that’s what they think. They equate that with success. They don’t think of things in terms of expected values. And so, my whole take on it is don’t think about losing money, think about losing percentages. And what I mean by that is, and I’ve said this before, go buy one, share of Amazon and trade it.

Because in the beginning, you’re not trying to make money. You’re trying to find a set of rules with which you’re compatible. Right. And if you’re sitting on a hundred million keep scouring the, the earth because there’s opportunity everywhere. Especially if you look at the world from a long, short standpoint, right? There’s no reason to be sitting 90% cash when you have that much money, unless you’re just kind of doing this for fun and kind of looking at it as a hobby, because you don’t have anything else to do, which is cool too. But there’s opportunity everywhere. And for the newer folks who don’t know what they’re doing, I would still advocate getting in the game and having some risk on because that’s gonna teach you and help you calibrate your system. Your system is your rules are the things that you do that help create your P & L.

And so if you keep track of your actions and you put real work, real money to work, that’s gonna help you a great deal. And that’s gonna be helpful to help you decide your edge. Once you have your edge we talked last week about that catch 22 that you want to trade when you have an edge. But when you’re first starting out, you don’t have an edge. So you have to trade anyway, right? But by doing “the trading,” you’ll help figure out what you’re good at and what you’re not good at. So that’s goes a long way to help you discover what your edge is. Once you’ve discovered your edge, then you can scale it and amplify it and start to trade bigger. But this way you will not have burnt through a ton of cash by trying to be too big or too aggressive with all your hunches, right. You will have put in your due diligence. You will know for sure, because you can see the data. Remember it’s it’s the dollars. Don’t matter. Think about risk and say one fourth of 1%, one 10th of 1%. It doesn’t have to be big when you’re starting out.

And again, that goes for the folks who are sitting on eight, nine figures, when you try something new like, oh maybe this is time to sell call spreads or something like that. Or to buy Put spreads if you don’t do it outright. So just do one spread. It can’t possibly kill you, right? Because when you do spreads, the most you could make or lose collectively is, is the distance between the two strike prices. So do it and see how it fits. Look at intra commodity spreads. For example, if you’re afraid to go long or short crude oil or anything else for that matter think about looking at spreads, if they’re better or more appropriate for you because this way in the doing of it is how you’ll get a really good education. And now again, I don’t know, who’s listening. So you have to talk with your financial advisor about what’s the best bet for you and what’s mostly appropriate for you given where you are in your life. I don’t know any of that information. So I can’t say what is best for you if you reached out can give you some insight, but I’m really not in the financial advice business anyway.

There’s something else that I’ve picked up on. I kind of hear it once in a while myself, although I very rarely listen to the episodes once I record ’em and edit them and then put them up is that sometimes when I’m speaking, you might hear a, a gap of me not speaking as if I’m trying to gather my thoughts. The truth is, is that seems to be a software glitch. That must come from one of the two effects that I run on the audio file as I’m producing it and getting it ready for publication. I’m not sitting there with long gaps of silence trying to gather my thoughts. So when you hear that, it’s probably a glitch in the software, I’m trying to figure out why it happens and what I can do to fix it. And so I just wanted to point that out that it’s not me sitting there kind of looking up at the stars for inspiration or otherwise. So I’ll see what I can do to fix it. If not just realize that it’s a glitch in the software and it might be something we have to live with here in MartinKronicle Land. All right. Have a great rest of your day folks. I’ll see you tomorrow.

Subscribe to the show  

Think in terms of percentages, not dollar values.

Click here to  get your free copy of The Inner Voice of Trading audiobook.

Please note: I reserve the right to delete comments that are offensive or off-topic.