Master Your Mental State and Your Life

Five Lessons From Chapter 8 of Psychological Analysis by Adam Sarhan

Today is the first day of the new month, and I finished four books in April. That’s down a bit from my usual average, but I’ve been focusing on quality over quantity lately. 

In April 2022, I was able to complete:

• Voices in the Ocean by Susan Casey

• Four Thousand Weeks by Oliver Burkeman

• Food Rules by Michael Pollan

• The Nineties by Chuck Klosterman

I told you I was focusing on quality over quantity, and that came through in these four books as I enjoyed my time with each of them. 

This month also marked my return to analog books as I ceremonially tossed my Kindle across the office sometime around Palm Sunday. There’s just something about having an actual book in your hands that I desperately missed these past few years. 

We’re getting deep into the heart of Psychological Analysis by Adam Sarhan, and this week’s chapter was a fantastic reminder that we have to be on constant alert against letting our emotions influence our trading process. 

The Same Emotional Detachment

The smart money trader views money for what it is: an object - just like a hanger in your closet. In time, you will learn to view money with the same emotional detachment you have for the hangers in your closet, and it will allow you to make more objective decisions about your trades. (106)

In chapter eight of Psychological Analysis, Adam Sarhan explains that we must view trading capital the same way we view hangers in our closets. You shouldn’t have an emotional response to losing either. 

This is one of those things that everyone knows in theory, but putting it into practice is always much more difficult. I thought I was well beyond that, but I’m learning more and more that I’m not nearly as far along on this journey as I used to believe. 

Financial Self-Sabotage

Ignore this concept at your own risk because until you drop your unhealthy relationship with money and adopt a new, healthy relationship with money, you will continue to commit financial self-sabotage. (108)

Sarhan continues this line of thought involving emotional attachment to money by explaining that the inevitable outcome of this type of unhealthy relationship is financial self-sabotage. 

Over the years, I’ve read dozens of books that talk about how money is nothing more than a way to keep score, but the problem I have with that idea is that it’s keeping score of a game that I desperately want to win. 

One way that I have been working on doing exactly that is to stop talking about my trading and focus only on sticking with a simplified version of my process. Again, easier said than done. 

Happiness is a Choice

Happiness is a choice. Choose happy. Be happy. It beats being unhappy every single time. (109)

Sarhan explains that a great lesson to learn from billionaires is always to have an attitude of gratitude. He advises that choosing to be happy beats being unhappy and suggests that happiness will translate into better trading. 

I’ve always believed in making a point to reframe every aspect of your life from a positive angle. It’s been a massive difference-maker in my life, but it’s also something I’ve been struggling with these past few months. 

Avoid Unnecessarily Complicating Things

Please avoid unnecessarily complicating things at all costs. The most successful investors, traders, and speculators on the planet have a simple plan, and all they do is execute their plan. (112)

Sarhan argues that our natural desire to complicate everything will work against the need to keep things simple. The best traders are the ones that can execute very simple strategies. 

This was the biggest takeaway for me this week. I was always under the impression that overcomplicating things was something that I struggled with on my own. 

Having Sarhan point out that it is human nature makes me feel way better about how often it happens to me. It also gives me the energy to keep working on managing it. 

Make Rational, Not Emotional Decisions

The secret to achieving any major goal in life (and beating the market, for that matter) is to learn how to make great decisions (especially when you are under pressure). In order to make great decisions, you must learn how to make rational, not emotional decisions and clearly weigh the potential risks and the rewards. (115)

Sarhan explains that the best way to accomplish any goal, trading-related or not, is to make great decisions that are totally removed from your emotions. 

Isn’t it interesting how we keep coming back around to this ability to remove emotion from our process? And how it’s actually much more tricky than we lead ourselves to believe?

We’re all works in progress. And as long as you realize that there is work to do, you still have the opportunity to get better every single day. Let’s work on doing exactly that this week. 

Speaking of getting better, I have some big ideas for a more fully-formed website to catalog the best of my reading notes, and I’d like to eventually open this book club up to exploring different types of books that could help all of us improve ourselves in other areas of life, which will naturally improve our trading as well. 

I’d also like to transition these emails from a one-way presentation to more of a multi-directional conversation, so I’ve turned on the comments over at SubStack. I’m guessing it will be crickets for a while, but eventually, I’d like to create a flowing conversation about improving ourselves throughout the week. 

If you leave a comment, I will certainly respond. Pick any one of these five points, let me know how it relates to you, and let’s get that conversation going. 

Have a fantastic and profitable week!

I’m not all that concerned with growing the list like most Substack writers, but if you know anyone that might be interested in joining the discussion, please forward this or send them over to tradingbookclub.com(http://www.easymoneybookclub.com/)! Thanks!