Psychological Analysis. Adam SarhanЧитать онлайн книгу.
was bankrupt. Not only had we lost everything—we had a margin call, which meant we owed the firm money!
Fueled by Klein's early success—the promise of one million dollars resounding in our ears—we decided that our failure was just bad luck, and we kept on trucking. I “borrowed” $5,000 from my credit cards and wired money over on Wednesday afternoon to restore the account before the end of the day. Boom! Just like that, we were back in business!
By Thursday morning, the infamous “69” account had doubled (if we ignored the money we had already lost—which we did), and we now had around $20,000 in liquid cash. I was immediately reminded of the line, “Mortimer, we are back!” from the classic movie Coming to America, which was a reference to the legendary trading movie Trading Places.
By Friday, the account was bankrupt … again! Emotional roller coaster? Sure. Fun? Not really. Devastating? Painful? Borderline soul‐crushing? You bet. Broke and 10 grand in debt, I was forced to shut down the account. Back in the “real world,” I wasn't making any significant money at my “day job,” so it took me what felt like forever to pay back the money I owed. Plus I had to tell my father that I failed, which stung more than losing his money.
As traders, we count our wins and our losses—our “W”s and “L”s. At face value, the infamous 69 account looked and felt like an L, but thankfully, we both turned that experience into a major W. I chalk it up to more “market tuition” because that week's experience was the proverbial seed that was planted that sparked my entire career.
TAKING CONTROL
Now that I'm a husband and a father, I am thankful to have survived that kind of devastating setback early in my life—at a time when I had time to recover from the loss, and the consequences were mine alone to bear. That Friday night, I felt stunned and beyond shell shocked, but the very next day, I woke up with a drive that I had never felt before. I made a decision that changed my life forever; I decided to take control, to figure out how to trade successfully, and most importantly how to go from the dumb money circle into the smart money circle (and stay there). Everything I did from that point forward was to accomplish that one goal: learn how to win. In order to do that, I had to rewire my mind, conquer my (former) self, bring out the smart money superhero inside me, and learn the laws of the smart money circle!
I was at my lowest point financially, and I decided I only had one place to go: up! Thankfully, I knew at the time that I didn't know how to join the smart money circle. I had tried a couple of times and failed, so instead of repeating my mistakes (which is what the dumb money circle does), I went on a quest for information and knowledge—and the wisdom to use them properly. I read just about every investing and trading book I could get my hands on. I attended seminars all over the country and did my best to meet some of the greatest financial minds I know of.
Years later, I learned the phrase “I know that I know nothing.” It comes from ancient Greek philosophy, and the saying is derived from Plato's account of the oral legal defense Socrates made for himself during his trial in 399 BC for impiety and corruption. Socrates himself appeared wiser than he actually was, he argued, because he “does not imagine he knows what he does not know.”
It is the foundation for intellectual curiosity because, if you think you know everything, then why would you spend any time learning something new?
Intellectual curiosity is the spirit of just about everyone who is self‐made in the smart money circle (the top 1%), and it is the spirit I want you to adopt as you move through the pages of this book. If what you've been doing hasn't been working for you, challenge yourself to approach the subject anew—with the spirit of a beginner. Live your life to the fullest, become intellectually curious, learn more, do more, and achieve more!
The American Tailwind
CHAPTER 2 Why You Aren't Beating the Market
HOW I ACCIDENTLY STUMBLED ON MY SECRET WEAPON: PSYCHOLOGY
Early on, I learned that your psychology (a.k.a. your mental capital) and your psychology alone will determine your success in life and in the market. Life, and the market, are filled with endless opportunities, more opportunities than any one person can possibly enjoy. Trust me, there is more than enough to go around a few trillion times. Your job is to be open‐minded, train your mind to recognize opportunities, and act on them whenever you can—because if you don't, someone else will. Even if you don't act on one opportunity, just like an elevator or the proverbial bus, there will always be another along shortly, guaranteed. It's illegal for anyone to guarantee results in the market, but I can guarantee you that there are what feels like an infinite number of ways to make money in the market, and your job is to find one that works for you and run with it.
Throughout this book, I will share with you what I've learned, but the key is for you to think differently, demand the best from yourself, and commit to doing the right thing, even if you don't feel like doing it. Your future self will thank you. Again, thanks to grace from above, here's how I stumbled across the connection between psychology and winning.
After my initial, gut‐wrenching losses in the market, I dedicated myself to learning everything I could. I read every book about trading I could get my hands on. Over the next six years, I earned an undergraduate degree and a graduate degree in political science, but my “real” education was in capital markets and psychology. I stumbled upon psychology and how it impacts just about every aspect of our life when I realized how psychology was a major force that impacted both political science and capital markets.
In my early 20s, I was studying political science during the day, markets at night, and working in between, and I realized that a golden thread between political science and investing/trading was psychology. The biggest blunders in both political and market history usually came from people who lost control of themselves, threw logic out the door, made lousy emotional decisions, and/or just became intellectually lazy. The opposite is true for the biggest success stories in both worlds. The most successful leaders, traders, and investors tend to be extremely logical and very disciplined, they respect risk by making great risk‐versus‐reward decisions, they do the work other people do not want to do, they've mastered themselves, and they make rational (not emotional) decisions—especially when they are under pressure. So, naturally, hungry to learn more, I dove into psychology, and that ultimately became the foundation of everything I do and part of the title of this book!
PAPER TRADING
Without realizing it, I turned into a learning machine. At every waking moment, I was reading about the market and trying to apply what I learned. Because I was buried in debt and had no money, I could not actively trade in the market. Instead, I wrote a daily and weekly “newsletter,” which covered my thoughts about the market, what stocks to buy and sell, where to enter and exit each trade, and how much to risk when the trade went the wrong way. Basically, I wanted to get my ideas out of my head and put them on paper so I could have accountability and actually track my ideas. I started a paper trading account—essentially a ledger of when I would have bought and sold—so I could track how I would have done if I had been working with real money. There's a benefit to trading with fake money—you're not emotionally attached to what happens; this way your emotions do not infect your decision‐making process. But the downside to paper trading is that when real money is on the line, your emotions are involved, and everything changes. So your real‐world results are rarely the same as your paper trading results.
During the early paper trading days, I lost a lot of fake money, but the more mistakes I made, the more I learned, and I wasn't paying the painful “market tuition” price that marked my very first experiments with the market.
Looking back, now that I'm in the smart money circle, the mistakes I