Financial Literacy

The Oddest Trading Advice You’ll Ever Receive

I’d like to take a step back from offering you a standard Trade of the Day to cover – what I feel – is one of the most important pieces of trading advice you’ll ever receive.

It’s also one of the oddest pieces of trading advice you’ll ever receive.

But, when it comes to proper trading, this advice is an essential component of managing not only your successes but also your emotions and expectations.

It comes from one of the most influential, life-changing books I’ve ever read on speculation, winning and wealth creation…

The Zurich Axioms by Max Gunther.

In this book, Gunther dedicates an entire axiom to trading losses.

Accept small losses cheerfully as a fact of life. Expect to experience several while awaiting a large gain.

Does this sound strange?

Maybe.

But listen to Gunther…

Welcome a loss? I never met anybody who could or did. (But) get in the habit of taking small losses. If a venture doesn’t work out, walk away and try something else. Don’t sit on a sinking ship. Don’t get trapped. If you wait for sagging ventures to improve, you are doomed to frequent disappointment – and doomed, too, to remain un-rich. The most productive attitude – admittedly not an easy one to achieve – is to expect small losses the way you expect any other less than pleasant fact of financial life. Taxes, or electric bills. Try to think of small losses that way. They are part of the cost of speculation. They buy you the right to hope for big gains.

Adhering to this axiom is a big part of successful trading in The War Room. In fact, a big part of “Smart Speculation” means being properly positioned ahead of time for a future move to occur.

After all, there’s no point hearing about all the “big winners” on CNBC after they’ve already happened.

That achieves nothing!

You want to be the one buying ahead of the hoopla surrounding newsworthy moves and events. If your strategies are executed properly – and your speculation hits – you’ll be the one cashing in while everyone else is wishing they had made that play.

And here’s the thing…

Even if your speculation does not hit (which will sometimes happen), don’t worry – because it’s not a catastrophic loss. You see, part of the art form of Smart Speculation is structuring your play in a way that allows you to get out for a manageable loss. If done correctly, you hit grand slams if you’re right – and you suffer only a tiny mosquito bite if you’re wrong.

Follow this formula over time – hitting a larger percentage of winners than losers – and you’ll come out ahead. That’s our goal, our mindset and our approach to Smart Speculation. And that’s exactly what you’ll be exposed to as part of The War Room.

To put it another way, War Room member Jeff O. had great perspective on this topic with a post he made earlier today.

He wrote…

I’ve been in The War Room about three weeks. Like a 10-year-old on Christmas, I got over excited and opened all my gifts at once. Without really taking notice of what I had. Basically, I traded everything, all over the board. I finally liquidated all of my positions and brought myself back to “zero on the timeline.” I lost a total of 2%. I chalk it up to learning/education. Not all that happy, nor all that sad. The lesson… settle down, do your homework and understand what you’re doing. I moved back in slowly and now after a few days of trading, I am back up 1%. Now I can act like an adult, instead of the 10-year-old. A valuable, but needed lesson.

This is tremendous perspective. Trading is a game that never ends. Take it slow. Be precise, but methodical. Be calculated, but decisive. Maintain your emotions. Now, I admit, all of these things are not easy! But that’s why our War Room trading community is so incredibly powerful.

Action Plan: I’d like you to experience the thrill of a big earnings winner. All it takes is one of these War Room overnight plays to make what some investors make over the course of years in the market.

But, oftentimes, waiting for this big hit to come means taking some losses along the way. It’s a balancing act – which is part of the trading game we’re playing. If you learn to manage your losses and your wins correctly, you’ll develop a lifelong wealth-building skill. To be part of this amazing trading community, I welcome you to join me in The War Room today!


About

Bryan graduated with a business degree from the highly rated Indiana University Kelley School of Business, and his first job out of college was trading stock options on the floor of the Chicago Board Options Exchange. He was mentored by some of the country’s top floor traders in the heart of the technology boom from 1999 to 2000, where he learned to identify and implement some of his most powerful trading secrets. Now he shares his secrets with a group of elite traders. We will be republishing some of his highly sought after content from his free e-letter, Trade of the Day.

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