A daily reminder that more wants more. Let's say that your daily goal is 100£. Let's also say that you got lucky and reached that goal within the first hour of your betting, would you stop or would you continue working? I really don't think that anyone would stop in this situation, why stop here, when I have 7 more hours to work in, right? And who knows if I will be in profit tomorrow? I might as well keep on going today.
And you should. You really should. But with a new set of rules. Not everyone will agree with me on this one, but greed really is good, IF, and only if, it's used correctly.
Greed in my world is walking hand in hand with my ambitiousness. Always wanting more, and aiming for more has kept me going for all these years. Each time you accomplish something in life, people tell you to be satisfied, relax and enjoy but why? If your potential is so much bigger than what you have just accomplished, why stop there? Don't be stupid of course, still take calculated risks, but the point I am trying to make is, like Anthony Robbins once said: “Never be satisfied with less than you are able to accomplish.”
Let's take an example. Let's say your goal in life is to own 5 apartments that you want to rent out. Before you begin buying apartments, your goal will be based on some calculations you have made. How much you earn, how much you can save up each year, what an apartment costs and so on. You then set your time frame to be 15 years from now.
But something changes. You get promoted. Your salary gets higher. You win the lottery, you rob a bank(don't do that) or your rich grandpa leaves you a lot of money after he passes away. You use this money to buy your first 5 apartments after only 4 years and your goal is reached. Would you stop there or would you change your goals? Why would you stop there? The only reason to stop now is satisfaction and the fact that you have reached the goal you set from the beginning. But clearly you are able to accomplish way more than you have predicted, right?
I know many of you now think that, if this is my view on it, then I will never stop and that can be very dangerous of course. But that is not the point I am trying to make. Of course, at some point, you will reach a number of apartments that will be difficult to handle on your own. Renting them out, renovating them, keeping them nice and clean so people want to live there. At some point you will have so many that you have to decide if you want to hire someone to help you, or if you want to stop buying. If 5 apartments is all that you can handle, then don't go buying more because then you have accomplished what you are able to accomplish. But if you know that you could handle 3-4 more, and your financial situation allows you to buy more, isn't that unfulfilled potential then? I believe it is.
So let's get back to the story we began with.
If you have decided to work for 8 hours, and your daily goal is 100£, and this goal is reached within the first hour of working, should you then stop or should you continue?
I would continue going, but with a change of rules. Let me explain why and how.
What happens to us if we reach our goal this quick? Surely a change of mind and a confidence boost right from that moment we reach the goal. But what follows with that boost of confidence? We all know that being over-confident can cause a lack of discipline. And I am sure that your boost of confidence, by reaching your goal this quick, will give you these two thoughts in your mind: “I can do anything now” and “I can play around with this money, because I have enough hours to win them back if I lose, and I have enough to play around with.”
And this is exactly where greed isn't good. This is where greed will push you to continue working, with too much confidence and a lack of discipline. This is a deadly cocktail
I have tried to paint my view of it in these two pictures below. And yes paint. I really used paint to illustrate this:
Top picture shows my view on how your mindset is before a day starts out, or at least should be. More or less. Here you can see that just enough confidence with a large amount of discipline will lead to making some good decisions in the market. It is again important to say, that this is my personal view on it. You don't have to agree and I understand if you don't, because this is not based on science or some lab results. This is based on something almost as important, something called experience.
Bottom picture shows what happens after we get a boost of confidence by reaching our goal quick. As you have noticed. I rate discipline over confidence.
So does this also mean that we start every single day out with low confidence? No, not really. Based on how it went the day/days before, how much sleep we got, how pretty we feel in the morning, how our meditation hour went or whatever you base your confidence on. The amount of confidence we have to begin with before we start a betting/trading day, can be different from person to person. But the amount of discipline should always be the same. Or as a minimum, very high.
Lack of confidence would only make you stay away from some bets/trades, but it wouldn't push you into making stupid decisions. Lack of discipline will.
Losing bets shouldn't have impact on your discipline, but it is OK that losing bets have impact on your confidence. Winning bets should boost your confidence yes, but it shouldn't have any impact in a negative way on your discipline. Your discipline should ALWAYS stay the same.
So back to the winning scenario. Should you continue trading after reaching your goal that quick?
If you can maintain a HIGH discipline with a boost of confidence, then yes, of course you should continue. When you reach a cocktail of these two combined, why would you stop? This might lead you to some of the most effective betting/trading that you will ever make.
But, and a huge BUT, you should only continue with a set of new rules, because now you are in a new situation.
Rule number 1:
If you have made 100£, do NOT risk it all. Make a decision to only “play around” with some of the money. Lets say 10-20% of your profit.
Rule number 2:
Use that 10-20% profit as a stop loss. If you lose that 10-20% and your daily profit falls to 80-90£. Take a break for an hour or two. From here on you can now decide. Should you get back to the computer and try to reach your goal again, with a new stop-loss, or should you call it the day?
I have been in this situation so many times, and this is where greed, combined with a boost of confidence and a high discipline has pushed me into having some of the highest profitable betting/trading days I have ever had.
Greed really is good if you can control the emotions that comes with it. If you cant, it will be a deadly cocktail for you and you shouldn't play around with it whenever you feel like its about to hit you. Wanting more is not a bad thing. In my world it is the same as being ambitious. But wanting more without any calculated risk, a stop loss and a mind you can control, will lead you in to some bad bad decision-making long term. I believe that is why people say that greed is a sin. And I understand that, because greed alone can be difficult to control and the outcome will 9/10 times be terrible. But if you can control greed, then I also believe that greed is good. It has been good for me for many years now and I understand the power that comes with it but also the devastating effects it can have if not used correctly.
Not to quote a guy almost everyone hates. But lets try to understand Gekko and give him a small round of applause for being able to control his feelings. A bit arrogant in saying: Greed IS good. When he should have said:
"Greed CAN be good" – Gordon Gekko.
