Looking for the Escape Hatch with Trading

Some of you hate your current jobs or financial circumstances, and see trading as an escape hatch to get out.

I am all for setting a big goal like trading full time and making a lot of money. I want your ambition to take you as far as it can and one of the great things about trading is that it provides opportunity to anyone with the dream and the willingness. 

But a problem that I’ve seen with some of my clients, and was recently brought up on my first edition of Office Hours, is that looking at trading as an escape hatch actually adds a lot of pressure to trading, compromises your execution and ultimately damages your chances of success.

That is a hard pill to swallow. Here you are doing everything you can to change your life for the better and the mentality you have about that change is making it harder to achieve while the self-inflicted mistakes only add to the pressure.

It’s hard to see how you can turn things around, but sometimes a small change in perspective can make a big difference.

The Great Escape Hatch

Financial freedom through trading

Money Can’t Buy Competence

A big part of what adds to the pressure is the sense of urgency. You hate your job, the fact that you have to answer to someone else, and that you can’t trade full-time yet. All the negativity that you have towards your current situation drives you towards an exit as fast as possible. But the intensity of those emotions cause breakdowns in decision-making and execution.

You size too big looking for a home run to give you a windfall of cash to buy your exit. You hold onto losers because realizing a loss is a step backwards, and you can’t allow that to happen. Worse, you know better, but you can’t stop yourself. The urgency is too intense. You have to get out now!

Can you relate to that feeling?

Part of the bigger problem here is a false perception that if you had enough money and capital to be free of the other job, you would suddenly be able to trade your account perfectly. You might think money is the answer to becoming a successful trader, but that’s mythology.

It’s not what happens.

Money can’t buy skills or competency. Skill begets skill and skill begets execution.

You’re looking for trading to be like winning the lottery. Of course, that’s not an entirely fair comparison, but to some degree, when you make money without skill you’re at greater risk of being like 80% of lottery winners who lose what they won.

Why?

Because you lack the requisite skills to understand how to manage an account of that size – both technically/strategically and mentally.

Let’s imagine that in one magnificent trade you made enough money to quit your job and trade full-time. Just like that, you’re where you want to be.

What comes next? Dreams or fantasies aside, since you basically got lucky – you didn’t build an account through a sustained period of trial and error, systematically developing your skills and knowledge, and honing a mentality and degree of emotional stability – you’re at greater risk of losing it.

These are the clients that come to me after they’ve crashed. The poker player who won a big tournament for a million dollars and then 9 months later, with only $300k left, they come to me desperate to recover. Or the trading clients, who made a ton of money only to lose heaps, sometimes in a single trade they kept piling into, unable to cut their losses.

If you are going to trade full-time, you need to be good at it. You need to build true competency that can withstand the chaos of the markets and adapt when it changes. A big monetary increase in your account, whether from one massive trade or a short period where you make a ton, doesn’t come with an equivalent increase in skill. The only way to upgrade your skills is to work on them, and a shift in your mentality about your current situation could lead to substantial benefits.

Training Camp vs Escape Hatch

What if instead you viewed your current situation as your own personal training camp? Your job provides the financial freedom to trade, and learn. It allows you to make mistakes, take losses and go through the ups and downs that you need to in order to develop the required skills. If you have a bad day or are too emotionally compromised to even trade at all, it’s not the end of the world.

While you still have the current job, there is less pressure on trading to provide income. Use that freedom like you’re an athlete training and preparing for a season, where errors are inevitable, and the opportunity for growth is high.

Because make no mistake, when you graduate to trading full-time, the pressure is going to be higher. When your livelihood depends on trading, the emotional intensity around mistakes and losses is scaled way up. You want to have already built a skill set capable of handling that kind of pressure, and the training camp approach is how you begin to form that foundation.

Try to look at the opportunities that are in front of you so you are better prepared when it’s time to make the leap. But for some of you, being ready to make the leap also means going back to review your trading and personal past.

Putting Past Failures in the Past

If you are looking for the escape hatch, it’s also important to understand what it is about your current situation that bothers you so much.

Are there past failures that you’re looking to wipe clean? Would being a success in trading mean that you’re no longer a failure in life? Whether in trading or personally, past failures can make you feel like your past experience isn’t valuable. For others there’s a “the grass is always greener” mentality, and regrets of how they ended up in this bad situation to begin with. Unfortunately, once you get to greener pastures, eventually you’ll again start looking for grass that’s even greener.

If you are beating yourself up for why you are in your current job or situation, I encourage you to do the work to reconcile your past and re-contextualize your current circumstances. Explore your past failures and missteps, and come to terms with them before moving on. They are valuable when you learn from them and uncover the skills you developed in the process. All failures hold lessons to learn from.

The ultimate goal is to remove some of the emotional intensity to unstick yourself from past failures. Remember, emotional intensity is what’s behind the errors such as sizing up too quickly, reentering after you get stopped out, not taking profit because you are looking for the home run, etc. A home run trade will not heal the pain of the past. You have to deal with that pain directly.

The Ugly Truth

The truth is, there is no such thing as an escape hatch, you’ll just take your unresolved problems with you. But there is such a thing as a solid plan to get you to the next step of where you want to be, and with the right perspective and strategy you can get there.

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Announcing Office Hours

Announcing Office Hours

I’m excited to announce that I’ve started a monthly “Office Hours” on YouTube where I’ll discuss different topics and answer your questions.