Other than the many issues surrounding responsibility that we discussed in Chapter 3, there isn't anything about trading that is more central to your success and also more misunderstood than the concept of accepting the risk. As I mentioned in the first chapter, most traders erroneously assume that because they are engaged in the inherently risky activity of putting on and taking off trades, they are also accepting that risk. I will repeat that this assumption couldn't be further from the truth. Accepting the risk means accepting the consequences of your trades without emotional discomfort or fear. This means that you must learn how to think about trading and your relationship with the markets in such a way that the possibility of being wrong, losing, missing out, or leaving money on the table doesn't cause your mental defense mechanisms to kick in and take you out of the opportunity flow. It doesn't do you any good to take the risk of putting on a trade if you are afraid of the consequences, because your fears will act on your perception of information and your behavior in a way that will cause you to create the very experience you fear the most, the one you are trying to avoid. I am offering

you a specific thinking strategy composed of a set of beliefs that will keep you focused, in the moment, and in the flow. With this perspective, you will not be trying to get anything from the market or to avoid anything. Rather, you will let the market unfold and you will make yourself available to take advantage of whatever situations you define as opportunities. When you make yourself available to take advantage of an opportunity, you don't impose any limitations or expectations on the market's behaviour. You are satisfied to let the market do whatever it's going to do.

However, in the process of doing something, the market will create certain conditions you define and perceive as opportunities. You act on those opportunities to the best of your ability, but your state of mind is not dependent upon or affected by the market's behavior. If you can learn to create a state of mind that is not affected by the market's behavior, the struggle will cease to exist. When the internal struggle ends, everything becomes easy. At that point, you can take full advantage of all your skills, analytical or otherwise, to eventually realize your potential as a trader. Here's the challenge! How do you accept the risks of trading without emotional discomfort and fear, when at the moment you perceive the risk, you simultaneously feel discomfort and fear? In other words, how do you remain confident and pain-free when you are absolutely certain you can be proved wrong, lose money, miss out, or leave money on the table?

As you can see, your fear and feeling of discomfort are completely justified and rational. Each of those possibilities becomes real the moment you contemplate interacting with the market. However, as true as all of these possibilities are for every trader, what isn't true or the same for every trader is what it means to be wrong, lose, miss out, or leave money on the table. Not everyone shares the same beliefs and attitudes about these possibilities and, therefore, we don't share the same emotional sensitivities. In other words, not everyone is afraid of the same things.

This may seem obvious, but I assure you it is not. When we're afraid, the emotional discomfort we feel in the moment is so real that it's beyond question, and it's natural to assume that everyone shares our reality. I will give you a perfect example of what I am talking about. I recently worked with a trader, who was deathly afraid of snakes. As far as he was concerned, he had always been afraid of snakes because he couldn't recall a time when he wasn't. Now he is married and has a three-year-old daughter. One evening, while his wife was out of town, his daughter and he were invited to a friend's house for dinner. Unbeknownst to my client, his friends child had a pet snake.

When the friends child brought out the snake for everyone to see, my client freaked and practically leapt to the other side of the room to get as far away from the snake as possible. His daughter, on the other hand, was completely enthralled with the snake, and wouldn't leave it alone. When he related this story to me, he said that he was not only shocked by the unexpected confrontation with the snake, but that he was just as shocked by his daughter's reaction. She wasn't afraid and he assumed that she would be. I explained to him that his fear was so intense and his attachment to his daughter was so great that it was inconceivable to him that his daughter would not automatically share his reality about snakes. But then I pointed out, there really wasn't any way she could have shared his experience, unless he specifically taught her to be afraid of snakes or she had had her own painful frightening experience. Otherwise, without anything to the contrary in her mental system, the most likely reaction to her first encounter with a living snake would be pure, unadulterated fascination.

Just as my client assumed that his daughter would be afraid of snakes, most traders assume the best traders, like themselves, are also afraid of being wrong, losing, missing out, and leaving money on the table. They assume that the best traders somehow neutralize their fears with an inordinate amount of courage, nerves of steel, and self-control.

Like many other things about trading, what seems to make sense, just isn't the case. Certainly, any one or all of these characteristics may be present in any top trader. But what is not true is that these characteristics play any role in their superior performance. Needing courage, nerves of steel, or selfcontrol would imply an internal conflict where one force is being used to counteract the effects of another. Any degree of struggle, trying, or fear associated with trading will take you out of the moment and flow and, therefore, diminish your results. This is where professional traders really separate themselves from the crowd. When you accept the risk the way the pros do, you won't perceive anything that the market can do as threatening. If nothing is threatening, there's nothing to fear. If you're not afraid, you don't need courage. If you're not stressed, why would you need nerves of steel? And if you're not afraid of your potential to get reckless, because you have the appropriate monitoring mechanisms in place, then you have no need for self-control.

As you contemplate the implications of what I am saying, I want you to keep something in mind: Very few people who go into trading start out with the appropriate beliefs and attitudes about responsibility and risk. There are some who do but it's rare. Everyone else goes through the same cycle I described in the example of the novice trader: We start out carefree, then become scared, and our fears continually diminish our potential. The traders who break through the cycle and ultimately make it are the ones who eventually learn to stop avoiding and start embracing the responsibility and the risk. Most of those who successfully break the cycle don't make the shift in thinking until they have experienced so much pain from large losses that it has the positive effect of stripping away their illusions about the nature of trading. With respect to your development, the how of their transformation is not that important, because in most cases it happened inadvertently. In other words, they weren't completely aware of the shifts that were taking place inside their mental environment until they experienced the positive effects their new perspective had on the ways in which they interacted with the market. This is why very few top traders can really explain what accounts for their success, except to speak in axioms like "cut your losses" and "go with the flow."

What is important is that you understand it is completely possible to think the way the professionals do and to trade without fear, even though your direct experience as a trader would argue otherwise.