At the root of many trading problems is a sense of scarcity or a lack of belief in the abundance of wealth and opportunity. To trade effectively, I believe, a person needs to have a sense of life’s potential bounty.
The Oxford English Dictionary (OED) defines abundance as an overflowing state or condition; as superfluity; as plenteousness. Abundant is defined as more than enough. Scarcity is defined by the OED as frugality, parsimony, meanness and as an insufficiency of supply. With abundance we have more than enough. With scarcity we have barely enough or not enough.
Successful traders have confidence that the markets will provide abundant and recurring opportunity and that they can identify and take advantage of those opportunities. The same is true in general of people who are successful in life. Successful people believe that life offers a cornucopia of opportunities and that they can identify and take advantage of some of those opportunities. For them it’s really a matter of selecting which advantageous possibility they will commit to and go after.
A look at successful traders and entrepreneurs also shows that they have been able to survive failure as many times as they have had to. They use failure as feedback. They learn from it and make changes and go on. Many super traders have experienced crushing loss in their early trading years. All of them picked themselves up, and with the sure belief that they could make it back, they did just that. They never said, “It can’t be done.”; or “I can’t do it.” They never said, “With that money gone, the game is over.” Successful traders and entrepreneurs find ways to replenish their capital and proceed toward their goals.
Successful traders are able to ride through periods of draw down easily because they believe the draw down to be only temporary. They hold an attitude of recurring abundance. Their confidence in their methods and their ability and their vision of what the markets can provide reassures them about their future success. Any period of loss is impermanent and therefore unimportant.
Confronted with a drawdown, a trader who comes from lack will stop trading or change methods or systems only to junk the new methods or systems at the next drawdown. Of course, I’m not saying a trader should stupidly keep doing what doesn’t work. What I am saying is that a trader with a sense of abundance and a verified methodology won’t crumble under temporary loss because she’ll know she’s simply passing through a difficult time that will end.
I’m not saying you should like loss. Winning traders don’t want to punish themselves, but successful traders don’t dread loss either because they know that whatever happens, they can make it back. The markets offer endless and plentiful possibilities for wealth creation.
Strangely enough, failure is often a necessary stepping stone to success. Those who are too fearful of failure may never get to the success they long for. Fear can lead us not only away from the thing we fear but also away from the thing we seek. Ironically, fear frequently leads us directly into the thing we fear. If we fear loss or lack, we can create it.
The reason fear can bring about what we fear is that we focus on the dreaded idea and supercharge it with strong emotion. Thus we act like a magnet for the thing we fear.
What underlies the fear of failure? Very frequently failure and the fear of failure are driven by a sense of scarcity of supply and/or personal unworthiness of riches-personal and financial.
So just exactly how does a sense of scarcity effect trading?
Scarcity can freeze a trader and keep her from pulling the trigger when she needs to get into a trade. Can keep her from ever trading. Can keep her researching, researching , researching until her time and money runs out and she still hasn’t traded.
An attitude of lack and insufficiency can keep a trader from recognizing and taking a loss. Can lock him into a losing trade until he buries himself. Can keep him from trading smoothly thereafter.
A sense of scarcity is also behind the fear of missing out. When a trader is fearful of missing out, he can overtrade in terms of size and frequency. He can jump the gun on a trade or force trades that don’t fit his criteria. He can climb unto a move that is practically over. Enough early, late, or forced trades will ultimately result in loss, thus bringing the very opposite of what the trader intended.
Fear of missing out can cause a trader to throw away good money management principles and trade in excessively large size. The end result of overtrading ultimately overtaxes the account and in certain cases actually leads to financial ruination.
Because underlying the fear of missing out is the notion that there are a limited number of opportunities, greed is produced. Greed is often based on the panicky feeling that there will not be enough. For the truly greedy person, whether the greed is for food or money, there never will be enough. There can’t be, because if there’s a universal scarcity, how can there be enough?
Have you ever experienced overwhelming remorse for a missed trade or a missed investment? Traders often report that the anxiety and regret of a missed trade is far more painful than a trading loss. At the core of such remorse is the lack of focus on opportunities yet to come.
This same belief in limited resources is often the cause of a profit ceiling, a wealth cut-off point. I see this with traders who get their accounts up to a certain amount and each time, proceed to give it all back. Such traders doubt their worthiness to accumulate wealth. Underneath this thought is the belief that there is not enough to go around, and that they are unworthy of more than a certain limited amount, what they consider to be their fair share. If they were conscious of an abundant supply, there would be no need to cut themselves off.
One way to avoid such a personalized limit is to find a cause you truly care about. Find something larger than yourself and begin tithing your trading profits to this cause. The more you make, the more you can give. The more you give, the more you can make.
In advocating an abundance consciousness, I’m not writing about easy come, easy go. No. That’s the inability to value wealth and let it grow. A spendthrift doesn’t honor the accumulation of wealth. Those who divest themselves of their wealth as soon as they get it don’t see wealth as something good which they deserve.
We need balance. We need to save money and let money flow. We earn. We save. We spend. We invest. We risk. We give. We wisely enjoy our money even as we make it grow.
With a sense of abundance we can allow ourselves to invest, to trade and to risk. We can afford to risk-in a calculated and controlled way-because there is more out there.
Balance is vital to the equation. It’s important to value wealth and to value opportunity, and not to squander them. You don’t want to squander and you don’t want to grasp.
How do you value opportunity? By being alert to it and by taking advantage of it. By selecting carefully. You don’t want to take an opportunity that doesn’t exist and you don’t want grab too much of it either. Nor do you want to treat an opportunity with indifference or casualness. As a trader, you take trading seriously and you trade consistently knowing that the rewards can be even greater than you dreamed.
If, however, you do miss a trade or leave a trade too soon, there’s no need to stress over it. Learn from it and vow to do better in the future as you sustain an optimistic view of your future abundance.
Now, I know it’s easy to focus on lack and poverty and homelessness and the genuine suffering in the world and fail to notice that opportunity is all around us waiting to be discovered and utilized.
Please allow me to end this article on the importance of appreciating the abundance of supply by briefly reviewing this aspect of the Bible story of Adam and Eve in the richly plentiful Garden of Eden. According to the story recorded in Genesis, God had provided for every possible need of Adam and Eve until one day the serpent beguiled Eve by asking her, “Yea, hath God said, ‘Ye shall not eat of every tree of the Garden?” Eve replied, “We may eat of the fruit of the trees of the garden: but of the fruit of the tree which is in the midst of the garden, God hath said, ‘Ye shall not eat of it, neither shall ye touch it lest ye die.’ ”
Well, the serpent persuaded Eve to overlook and forget about the plenty she did have and directed her attention to that one tree which was forbidden. Despite all the plenty God had given her, she ate the forbidden fruit and she persuaded Adam to do the same. God threw them out of the Garden of Eden and kept them from ever reentering the garden. He cursed the ground, so that Adam had to struggle outside the garden with thorns and thistles and to sweat for his bread.
It’s easy to overlook the supply. What one thing do we know about our supply, the markets? They are there and will continue to be there with plenty of movement and possibility. They provide us with rivers of opportunity. Pay attention to that. Count on it.