Many people equate their self-worth with their net-worth. If this is true for you as a trader, you may struggle with trading fear and greed. You’re fearful of losing money and greedy when it comes to making money. I’m not trying to point fingers; we all fall somewhere on the spectrum of fear/greed. But if you are obsessed with your wealth, that’s not a good thing.
So let me ask you this:
Are you happy because you have accumulated wealth? Do you love to talk about it? Are you terrified of losing it? Is your self-worth completely intertwined with the amount of cash you have in the bank?
Imagine you lose your job. While you look for a new one, you have to dip into savings to pay the bills. Your pile of cash starts getting smaller, and you become testy – maybe even angry or depressed. If your happiness is tied to your wealth, you may fall into a negative feedback loop that is nearly impossible to break.
Is trading fear and greed tied to your self-worth?
I have lost plenty of money over the years when I let greed get the best of me. But it didn’t destroy me, because my self-worth is not tied to my bank statement.
I am not trying to preach or persuade you to act in any particular way, but I do get worried when I see traders freak out when their portfolio takes a hit.
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Building wealth often takes a lifetime. Perhaps you build wealth through a long career, saving for retirement, or trading for income – or all three. Do you really want to spend an entire life obsessing over money? I doubt it – and I doubt you want people to remember you for that, either.
Self-worth is the internal sense of being good enough and worthy of love and belonging. I derive my self-worth by how I spend my short time on this planet and the positive impact I have on others. One of my favorite ways to do this is by spending quality time with friends and family.
I asked my Editor, Monika, about her view of self-worth and net-worth. She said that money in the bank is strongly tied to her sense of security rather than her self-worth. Very interesting, right? She added that her self-worth is more strongly correlated with living her values (being kind, adventurous, funny and thoughtful) and being strong physically and emotionally. Balance is the key.
No doubt having money in the bank provides flexibility and options. We can travel, drive nice cars, buy a vacation home, and splurge on jewelry. It may elevate our status and expand our social circle. But it may not make us happy.
So the next time you’re struggling with trading fear and greed, remember to ask yourself if your self-worth is getting in the way.
Bob Lang is a top technical analyst and expert options trader who teaches people how to successfully trade options for income. He is a sought-after mentor and teacher, published author, go-to chartist for Jim Cramer and popular speaker at industry conferences and tradeshows. This post originally appeared on the Explosive Options website.
