Taking money from other people is a hard skill, particularly when everyone is trying to take money from you…
Is your comfort zone holding you back as a trader?
As James Altucher told me, it doesn’t matter what age you are: 20, 40, 60 or 80: you improve and enjoy life when you dive into the deep end of the pool, swim for your life, and survive. YOU LIVE!
My best trade this year was when I bought GBTC (Bitcoin Investment Trust) and made about $2,000 in one week. The trade terrified me. GBTC isn’t even listed on Finviz. In fact, it’s an over-the-counter listed stock.
Everybody around me thought I was crazy. I got people warning me that I could lose everything.
These traders that were freaking out on my OTC trade meant well. But they were speaking from their own comfort zone.
If you are unwilling to go out of your comfort zone, then your returns will be mediocre at best.
The longer we trade, the more we form the habit of trading within a comfort zone. But life teaches us that the greatest gains in life come from going outside your comfort zone.
If you’re married, you know this. Remember when you got up the courage to communicate with a woman you didn’t know? It took guts to ask her out on that first date. It took more courage to go for that first kiss. But had you stayed in your comfort zone, you’d still be single and alone and you probably wouldn’t have a daughter or son either.
If you have a job in a corporate environment, you know this. Maybe a task came up that you were nervous about doing but you went for it anyways. You kept doing tasks you weren’t comfortable with but gradually you got better at all of it. Then you got a new title and a raise. Had you not been willing to step outside your comfort zone, you’d still be doing the same tasks you’ve always done and you probably wouldn’t have gotten those raises over the years either.
Just last week I had another huge win in silver. I told you guys I wasn’t trading commodities anymore because I wasn’t good at it. I imprisoned myself in a comfort zone of my own making. Last week it felt like reckless abandonment when I went long on a swing trade in silver. I was so nervous. I couldn’t sleep very well at night. People say if you can’t sleep well at night you shouldn’t be in the trade. I think that’s nonsense. If you can’t sleep well at night it means you’re pushing out of your comfort zone which is exactly what you should be doing as a trader.
I made big money in an options trade in Illumina years ago. I then lost everything trading naked options with Scottrade. I switched from Scottrade to Etrade and Etrade wouldn’t let me do naked options. I spoke with Etrade over the phone. I even lied to them about my experience with options. They still wouldn’t give me a naked options account. I said screw options. I don’t like options because brokerage firms like Etrade are little girlie dramas about it. But at least I tried. Now I’m not interested in options. Failing at something is ok. At least you tried. There’s no shame in trying, and you have education to gain. Please don’t send me website links about different options brokers. I’m not interested in trading options anymore. What interested me yesterday, may not interest me today, but maybe it will tomorrow, or not.
The point is, you should be doing SOMETHING outside your comfort zone for the lessons in life invariably are the same lessons in trading.
If you always stay in your comfort zone, you’ll be lucky to keep up with the S&P 500 average. A 401K is for people who want to invest in a comfort zone. Gone are the days of sticking your money in a 401K and then looking at it 40 years later to discover you’re a millionaire. Maybe that was possible between 1960 and 2000 when the market and economy grew so rapidly. It’s not possible today.
Nothing great in your life ever came from just staying in your comfort zone. Your trading is no different.
The discomfort zone is NOT about blowing up your trading account in a risky penny stock. It’s about finding happiness and successful trading outside your comfort zone.
So I traded silver for the first time since 2012.
I was terrified. And I thought after I took the position that I was going to lose everything. I had a panic attack.
Why did I just buy silver? It’s down 10 cents from my entry in just a few minutes. I’m going to lose everything. Maybe I should just sell now and get out of the trade so I don’t feel so much discomfort.
Then a voice said don’t be a sissy b*tch Lance. You’re middle-aged and losing your hair and so maybe your male-hormone level is low or something because you’re being girly about this silver trade.
That’s right, I thought. I got angry and just turned off the darn computer and walked away from my trading desk. I didn’t look at the trade for another day because I was freaking myself out too much.
Here’s how the trade worked out:
I was reminded that if a stock bounces repeatedly off a support level, it’s ok to bet that it will bounce off that level again even if it’s linked to a commodity like silver that I’ve been afraid to trade for the last 5 years.
Was this trade fun? No. It was pure hell. But when you push through your fear, go outside your comfort zone, a new world of possibilities opens up for you to explore.
I’m happy for now until my next losing trade.
If you found this lesson helpful, please share the positive message with your trading buddies.