How To Succeed in Trading by Failing Well

Have you ever had to write an important sales letter 📄, a vital business presentation 🖥️, or maybe even a eulogy for a loved one 🕊️? How many drafts do you think you did?

Bill Maher, who has been a comedian for decades 🎤 with a weekly HBO show 📺 , says that to this day he often does twenty rewrites for his signature 5-minute monologue 📝 at the end of every show.

How about golf? ⛳ Or tennis? 🎾 Or basketball? 🏀 How many putts, strokes, or shots have you taken in your life just to achieve a modicum of mastery?

Now imagine if we thought of every rewrite ✍️, every missed putt 🏌️, every double fault 🎾 as a stop-out trade. How many of us would achieve anything in life?

All human errors are basically mistakes in judgment or execution 🤔, and all of us understand that we need to practice over and over again before we can achieve even a small measure of control. But trading is different. It’s the one activity most people quit within three months of trying 😕. People will play golf badly their whole lives 🏌️. People will practice singing 🎤 or dancing 💃 for years. People will become obsessed with barbecue 🍖 to the point of spending a small fortune 💰 on smoking equipment to produce a piece of meat they could easily buy for a few bucks from a restaurant.

But trading is different.

Why? 🤔

A few reasons, but one of the most underappreciated ones is that trading, despite its solitary reputation, is fundamentally a very public activity 🌐. There is no practice stage for trading. If you are trading futures, for example, your first trade is made on the Chicago Mercantile Exchange 🏛️ against literally the smartest people in the world 🌍. Imagine if you wanted to learn singing and your first lesson consisted of getting up in front of a sold-out crowd at Madison Square Garden 🎤 competing against the cast of Hamilton 🎭.

How many people would succeed under those conditions? How many people would quit after three months of humiliation? Pretty much 90%—which are the stats in trading 📉.

The other reason that trading is different is that the cost of failure is so much more acute 💔. Imagine if every time you missed a serve in tennis 🎾, a putt in golf ⛳, or misspelled a word in your report 📝, someone took out a whip and gave you a couple of lashings. How motivated would you be to try again? 😣

That’s pretty much what the market does to you every time you get stopped out 📉. Maybe the physical pain isn’t the same, but the psychological sense of humiliation and rage are identical 😠. And of course, the bigger the loss, the more vicious the whipping.

So ironically enough, the only way to make progress in trading is to accept that you will fail miserably every step of the way and enjoy it for all it's worth 🎢. You are in front of a big crowd at MSG and you can’t sing? Who cares? Tell them a joke, read a poem, tell them a story—find a niche that plays to your strength 🎭. You may bomb once, twice, twenty times, but eventually, you will find something that resonates, and by that time, you will be a veteran at performing in front of the biggest, most important crowd in the world 🌟.

Next, you need to make the punishment less painful. Turn a whipping into just a mild pinch by trading smaller 📊.