A Trade Made is A Trade Made

One of the toughest things about trading is you always get a look back. It can be frustrating.  Do it enough, you open yourself up to self-doubt and then erosion of confidence.  A couple of weeks ago, I decided to sell some stock and go to cash.  Since then, the market has been on a tear.  I was wrong.

The decision is made though.  Now it’s time to figure out the next decision.

Businesspeople often make decisions that are binary and set in stone.  Traders get flexibility.

Traders get to make decisions all the time multiple times a day.  That’s not the case in business.  In trading, you try to slow things down.  In business, you try to be quick but don’t hurry.  In trading, you often get the chance to rethink or retrade your decision if the market allows it.

When you are considering making a trade or doing a deal, one thing you have to do is give yourself the mental and emotional space to walk away from it.  If you aren’t willing to walk, you will pay too high a price.  Or, you will sell at too low of a price.  Sometimes, you get a second chance but not often.

I sold stock and I was right for a week.  That was my chance to get back in and get all of the last week and a half rally.  But, I didn’t and I will live with the consequences.  The timing in my life to be more in cash is probably right.  That’s the other thing about decisions, you have to accept the responsibility for them.

One thing I find with traders though is that you get that one chance to make that decision.  Then it’s over and they move on.  In business, sometimes this doesn’t match up with expectations.  People on the other side of the table think you are posturing or trying to get an edge when all you are trying to do is drive a deal.  You lay your cards on the table, they make their decision and you move on.

I heard a great story about decision making like this and it didn’t involve a trader but a tremendously successful entrepreneur.  He loved golf.  He wanted to build an 18 hole golf course in Michigan where he had a summer home.  He started to acquire the land for that golf course.  As he did, certain landowners smelled some blood in the water.  He went to a farmer whose land bordered the land he had purchased and told him that he wanted to buy the land, and build a golf course on it so he could have 18 holes.  He said he would make one offer, but it would be very fair to the farmer.

He offered a price and the farmer rejected it.  The price was above market.  The farmer thought he could squeeze for more.

The entrepreneur went on to build one of the greatest nine-hole golf courses in the United States.  He put in two sets of tee boxes so you could play the full 18 if you wanted.  The farmer kept trying to sell his land to the entrepreneur, but the entrepreneur wouldn’t have it.   He’d moved on.  He’d adapted.

One thing that great deal makers learn is that you cannot make a deal without wanting to walk away from it.  If you are dealing with a trader on the opposite side of the table, usually they aren’t angling to try and work you over for a huge advantage.  They are trying to get a deal done.