One of my guilty pleasures when I have some free time is to watch survival shows. My favorite is “Survivorman” with Les Stroud. One of my favorite quotes from Les is “You Sweat You Die”. What he means by this is that when one finds that they are lost in the wild their first instinct is to panic and they usually do things that are counterproductive to their wellbeing, like trying to run to figure out where they are. Most times this leads them to getting more lost. They sweat and put their lives in danger with nighttime soon to arrive.
I can attest to this. I have gotten myself lost on a couple of occasions. When you figure out you are lost it can be a scary situation. On one of these occasions when I got lost my first instinct was to hike very quickly trying to figure out where I was. The problem was I was hiking in the wrong direction. I went an additional two hours before I calmed down and realized I needed to make a plan. The problem was sunset was less than an hour away and I figured I was at least 10 miles from the car. Luckily, I had a lighter so I decided to make a fire and just sit there all night until daylight when I could try to back track. It was one of the longest nights of my life. I had gathered what I thought was way more than enough firewood, but it ran out around 3 AM. I was cold the rest of the night and every sound sent shivers down my spine. You can’t imagine all the eerie sounds you hear in the woods in the pitch black in the middle of the night. In any case I made it through the night and at first light I headed back in the direction I had come. After a couple of hours or so I came back to the point where I first realized I was lost. I decided to keep going in the direction I was headed and after about one quarter mile I came to a trail junction and found the trail signs. This was the trail I had missed a day earlier. If I had not panicked the day before when I thought I was lost I could have easily found this junction and completed my hike.
How does this relate to trading you ask? Well in trading most of us operate on our emotions. When we lose control, it can be the equivalent of sweating when we are lost in the wild. In fact, many of us will sweat when we are particularly stressed out because of a bad trade or series of bad trades. Getting in this state too often can lead us to putting our accounts into jeopardy.
We must learn to calm ourselves when we get into this state. One way to do this is to have a catch word or phrase that we can repeat to ourselves. When we hear this phrase, we take some predetermined action that can help us calm our emotions. For me that phrase is “You Sweat You Die”. When I repeat that phrase to myself it signals me to get up and walked away from the monitor. It may be for five minutes or a week, it just depends on what the situation is at the time. But I know when I hear that phrase, I am about to do something stupid, and I must back off. The strange thing is, I have been using this method for so many years that the phrase will now come into my mind before I even think about it and when it does, I am usually in need of it. It’s strange how our minds work.
If you are having problems handling your emotions I suggest, as an exercise you come up with your own phrase and action to take to see if this method can work for you. At first you will have to consciously think about the phrase, but with time you may find it becomes an automatic early warning system.
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