Risk is a very important topic to traders. But what are we, as traders, risking? Is it money? Is it self-confidence? It is a little of both or is it something else entirely? Do you know that your view on risk and what you consider to be risky verses what you don’t, came from a part of your life that had nothing to do with trading and at a very young age…. Below, I have copied an article I received from Bob Proctor that I think explains risk and its origins very well.
My [Bob Proctor] dictionary tells me that to risk is “to expose oneself to the chance of loss.” I suppose that is true. Another piece of literature I was once given (author unknown) suggests that:
To laugh is to risk appearing the fool.
To weep is to risk appearing sentimental.
To reach out for another is to risk involvement.
To expose feelings is to risk exposing your true self.
To place your ideas, your dreams, before a crowd is to risk their loss.
To love is to risk not being loved in return.
To live is to risk dying.
To hope is to risk despair.
To try is to risk failure.
You may avoid suffering and sorrow if you don’t risk, but you simply cannot learn, feel, change, grow, love, live. The greatest hazard in life is to risk nothing. The person who risks nothing, does nothing and has nothing. Only a person who risks is free.
What causes individuals to shy away from taking a risk, even if it is a low risk and will give them something they really want? Well, certainly high on most people’s list would be fear of loss, failure and perceived humiliation if the loss were to occur. Why would we automatically think that we would fail at something? Why wouldn’t we first try and see, and then if we did fail, learn from that experience and move on? What causes us to have these thoughts of inferiority?
Well, I believe it dates back to our little life. And, since risk-taking, to my knowledge, is not a subject that is taught in school, it would lead me to believe that a person’s fear of taking risks might stem back from before they can even remember. When you were a child taking your very first steps, it wasn’t uncommon to hear one of your parents or guardians say, “Be careful, you might fall.” Or, “Don’t do that, you’ll ….” Though some of this is rhetoric and you don’t really pay much attention to it, for some, it begins the pattern of playing it safe.
Think of how much better equipped we would be to face life’s challenges and succeed, if we had repetitively heard, “Take a chance and don’t worry about falling, because you’re going to fall…probably quite often. Falling is an important part of learning.” Many of the greatest lessons you’ll receive in life are going to come from falling … from your failures.
Failing will never make you a failure unless you quit. Unfortunately, very few people heard that when they were small. The vast majority of our population have been mentally programmed to play it safe.
I have often said that a little baby is a natural born risk taker. The baby never considers the consequences of falling when it is learning to walk. Falling is acknowledged as a natural consequence to learning to walk. I guess you could call it a calculated gamble; it’s a prerequisite to mastering a myriad of motor skills required to get you on your feet and moving. It’s a natural progression in movement. Why then, wouldn’t we stop to consider that any movement into unchartered territory should be viewed with the same consideration? What happens to us?
Why is it that we do not see the process of reaching our goals as having steps similar to the ones the baby must take in order to learn to walk? There will be some stumbling and falling in the learning process, but success can only be reached when we are prepared to take those steps, all of them, even the ones where we may fall down. The real win is the confidence and experience we acquire which translates into new opportunities for growth, enjoyment and expansion in all areas of our life.
When I was a youngster in school, I participated in track and field. Pole-vaulting was my specialty; it was the one event I seemed to excel at. I clearly remember knocking that bar flying more often than I cleared it. I also remember I was not very enthusiastic when that happened. Knocking the bar off left me with a feeling that because I had failed, I was a failure. I had failed and as I remember, no one advised me of anything different. In retrospect, it would have been an excellent opportunity for one of my teachers to help me understand one of life’s greatest lessons. But, it never happened and it would be many years before I learned the truth, the hard way.
However, every time I ran down the field and lowered the pole into the box, attempting to vault myself over the bar, I was challenging myself. Taking risks is essential when you want to reach a goal and the purpose of goals is growth. When you challenge yourself, you bring more of yourself to the surface. If you knock the bar flying today, at least you will know you are challenging yourself; you’re a success!
If you dream of living your life in a really big way, you must accept risk-taking as a very real part of the apprenticeship you must serve. Make a decision right now to change. Decide this very moment there will be no more playing it safe … no more “saving it for a rainy day” type thinking in your life. When people get caught up in the habit of saving for a rainy day, that is generally what they get … a rainy day.
I clearly remember the first time I heard Earl Nightingale. Earl was telling a story about a farmer who was out walking in a field. He looked down and saw a tiny pumpkin growing on a vine. Nearby, he spotted a small glass jar. The farmer reached down and placed the tiny pumpkin inside the small jar. The pumpkin continued to grow until it filled the inside of the jar. Beyond which it could not grow.
There are a number of people like that tiny pumpkin. They limit themselves and refuse to take a risk. They never truly test the strength of their abilities. You will never get to second base if you keep one foot on first. Too many people go through their entire lives playing their cards close to their chest. They never step out and bet on the surest thing in the world … themselves. If you hope to accumulate great wealth or achieve high goals, history records that the first few steps have a high degree of risk. You must turn your back on safety and security. To make it big, you must take big risks. You will very likely have to put yourself in a highly vulnerable position. It is also worth remembering you cannot almost take a risk.
Eleanor Roosevelt said, “You gain strength, courage and confidence by every experience in which you really stop to look fear in the face.” Follow her advice and liberate yourself from the crippling emotional state of fear and enter into a world of freedom.
How does your view of risk-taking factor into your trading, and your life, and how does it hinder you? Would you like to change that? Are you ready to change it? Let me know how I can help you do that very thing.
Until next week…Green Trades Everyone!