Risk vs Reward

Although always in the forefront of my mind as a trader, I've been thinking about this topic a little more recently than normal.

As some of you may have heard, we had a highly-publicized tragedy here in Utah after a young man, John Jones who is pictured above with his child, got trapped and died in a small cave. As an outdoor enthusiast who has taken his own fair share of risks from time to time, whenever you hear stories like that it certainly makes you think if the fun we have is worth the risks we take. My sincere thoughts go out to John's family during this most difficult time.

As traders, we all tend to frame everything we do in terms of risk versus reward. At least I do and, the older I become, the more hesitant I am to take risks that involve life and limb. The opposite has become true with my trading. I'm far more likely to take risks now that I wouldn't have in the past because I've learned to control fear and properly evaluate the risks I take in the way that I'm never in too great of danger. Needless to say, the good thing about the market versus cave spelunking for example is that no matter how poorly you may do or how many stupid mistakes you make (and I've made more than my fair share), at least your life is not hanging in the balance. Even though I'm sure some of you think it does and frankly take this game far too seriously, the day I do that I'll pack my bags and move onto to other adventures.

Speaking of which, earlier this week I received a number of complaints after I said the following: "If you're not having fun out there, you're doing it wrong!" The fact is that I have a lot of fun every day and I think that's one of the main reasons I'm really good at what I do. For good or for ill, I truly enjoy the daily battle and challenging myself against the best traders in the world in every trade I make. The other day my wife came home and said "Boy - you're certainly in a good mood! Did you make a lot of money today?" The fact was that the day she asked me that it was one of the worst trading days performance wise that I've had in many months, but she couldn't tell it and that pleased me.

I've learned over the years especially working with other traders one-on-one through my mentorship group that many are not built that way and don't find trading and investing fun. But, I do sincerely believe that if you don't find investing and trading enjoyable, there is no reason to spend a moment any longer wasting your time. Instead, find an endeavor that makes you excited and fulfills you. Life is too short for anything less than that and unless you enjoy what you do, I don't think you'll ever be truly successful. All of us have our own gifts and talents and one of the most important things is finding what those are and then putting them to good use.

In the end, the risks you take need to be really worth it, and that calculation has a lot more to do with quality of life than it is about making more money in the markets.