Why are You Trading or Investing?

Posted on April 5, 2012 by Editor

Ever asked yourself why you are trading or investing? To make money you might answer.

Well, why do you want to make money? To buy a nicer home for my family. Now, why do you want that?

Stop here for a moment. Think about everything you are doing, every first thought you have when you get out of the bed. Human beings can do many things for many reasons but as the chart above shows, we ultimately want happiness.

Won’t it be great if we spend some time soul searching ourselves, and get straight to happiness? Or some shortcuts there?

So many people say things like “if I make a million I will be happy, if I can be the xxx position at the xxx job I will be happy.” Why should happiness be conditional upon some other factor? If you do not meet that criteria does that mean you are never really happy?

A lot of us spend our time learning the science of trading, for example trading strategies, trading systems, investing formulas. But until we are happy trading and investing, we will never be masters at it.

There are broadly 3 Types of Happiness

In the picture above, we see the smiley faces to the right – that indicates how long the happiness lasts once you take the activity away.

• Rockstars are people who go to the casino or make bets and gambles. They get high when they make money, but this happiness quickly fades away when they stop the activity.

• Flow happens when you are doing something and you lose track of time. This is when you are totally engaged and the happiness lasts longer. For us at AsiaPacFinance.com, Flow happens alot when we are researching and testing trading strategies, or when we are working out at the gym. The more time you spend in the flow, the happier you become.

• And the third and longest-lasting happiness effect is when you are doing something which means more than the result. This is the reason why many successful people donate a large chunk of their wealth to helping others, it gives their lives more meaning and purpose, and makes them happier. On one extreme, you see people giving up everything to serve a higher calling, because it makes them happy. Anything else will be shortchanging their happiness.

Trading is not a sprint, it is a marathon. If you knew you were running a marathon, won’t you want to understand the science of it, instead of running randomly around the parking lot?

The media enjoys worshiping market wizards who struck it big in the shortest period of time, because these stories excite people. But really, understand that your trading career is long term, and your approach to every individual trade will change. You will stick to your rules more, you will study your performance and find ways to systematically improve so you finally get to your destination. If you were running a marathon, you would pace yourself and not go all out at the start, the latter causes people to burn out or give up.

We have heard of so many people quit trading or investing. They say things like:

“I learnt nothing from the seminar” – these people wanted to be spoon-fed. They paid money expecting the Holy Grail which we have explained here, does not exist.

“I lost money” – these people give up too easily after a setback. They associate the period of loss with the activity of trading and investing. They wanted a quick fix.