- 2000: Volume 9, No. 3 Making the Best of the Worst Experience

If you were faced with the worst experience that you could imagine, would you come through it stronger than before and ready to get back to your trading? Or would you emerge so badly bruised that your scars would effectively seal you off from future success?

As a trader, you constantly risk facing bad situations, whether it is in your professional or in your personal life. The market is clearly not a benevolent force and, whether you are a trader or not, you face the potential for pain in your personal life. The question is "Are you prepared?"

When the worst happens, it is likely that you will feel helpless and powerless at first. Nevertheless, you have two choices that are always within your control, even if you may not be aware of them.

First, you can choose how you feel about the experience. This is true although you may find yourself resisting the idea. Most people believe that they have no choice about how they feel. To paraphrase Warner Earhardt, the EST guru, you may not get to choose what you experience, but you can choose how you experience it. For example, you cannot choose whether or not to be involved in a market crash, but you can choose to experience it as a tragedy or as an opportunity, such as a major lesson learned.

Second, you can choose to act as if you feel a particular way. "Acting as if" is a choice. In the midst of a crisis, some people who are filled with fear will act as if they are calm and know exactly what to do. This set of actions requires a choice. The results, of course, are counter to logic. The frightened individual who is acting as if he is fearless begins to feel in control and those people who are around him believe that he is in control. They calm down and the crisis becomes more manageable.

The Things You Know

The first step in making the best of the worst experiences is to take stock of what you already know. I strongly believe in assessing your resources, regardless of the problem. One of your most important resources is what you know about a situation, even before it develops.

By now, the first thing you should know is that to be human is to be in the way of things that happen. No one gets out of this life without experiencing pain, loss, catastrophe, illness, betrayal, disappointment, humiliation, rejection, and heartache to some extent. The list of possible personal and professional losses is long and distinguished. Those of us who realize and accept this fact are in a much better position, not only to lessen the pain, but to shorten the list.

Knowing in advance that good and bad "things" are going to happen in life allows you to plan for them. One of the most important steps in creating a successful life for a trader is to take the time to plan. This plan includes not only a business plan, but a plan for all the other areas of your life. I call this comprehensive plan a life plan, which includes an assessment of your resources and contingency planning. Contingency planning assumes that major things are going to happen that are either wonderful or terrible, or possibly both. So, you need a plan for all of the things that can go wrong as well as all the things that can go right. My book, Getting More Out of Life, contains a life plan that has made a big difference for people by getting them to focus on the positive things in their lives while preparing for the things that can go wrong. While you do not need my book to do this, you need a form of this type for planning in order to be prepared for life.

We are usually pretty clear on the negative impact when things go wrong. Unfortunately, most people are totally unprepared for all of the things that can go wrong as the result of things going right. When people realize their wildest dreams and make that fortune, acquire that mansion, or win that lottery, they have seldom planned for the isolation, the loss of self-confidence, the paranoia, the ennui, or the stress that can result from becoming wildly successful.

The second thing you should know is how you will react to events in your life, as well as how the people around you who have a direct influence on your life, will behave. To have an understanding, beforehand, of how you and your significant people will react is like going into battle, knowing the enemy's plans.

For example, if you have just experienced a major loss in the markets, do you know how you will react? How will your wife, partners, and investors react? Let's say that you already know that your first reaction will be to go into a state of denial, your wife will get hysterical and threaten to leave, your partner will hit the first bar to anesthetize the pain, and your investors will threaten to sue. Although this is all bad news, the fact that you know in advance how everyone will react will allow you much needed time to develop your game plan. Now you have a chance to create a response to all of these reactions.

Suppose, however, that you know in advance that you can rely on the significant people around you to be supportive, philosophical, and prepared to take action to correct the problem immediately. This information is also incredibly helpful.

Bill Clinton, regardless of your political leanings, has a very predictable and successful way of responding to a crisis. From observation and accounts of the people closest to him, he compartmentalizes his life so that he puts the crisis in one box while attending to everything else. As a consummate politician, he finds someone to take the fall for the crisis, preferably someone who has pledged loyalty to him. Then, he recreates the truth so that it best fits his needs. This reconstruction of the truth and his appearance of confidence allow the people who believe in him to continue to believe in him. And best of all, he continues to believe in himself. In this manner, he rides out one crisis after another. If you are dependent upon him in a crisis, you know how he will react, which is very important information.

Now that you know how you are going to respond and how the significant others in your life will react, factor this information into your contingency plans. As an example, if the region where you live is prone to floods or hurricanes and you need to plan for this contingency, can you count on your state's governor to send out the National Guard immediately to help or will you be on your own for a long time? What can you count on and what can you not count on? To what extent will you personally go to work things out and to what extent will others have to?

Planning in Advance

Taking this process one step further means that you should also look past the important people in your life. As a trader, you need to be looking to the industries and networks of services upon which you rely for their own predictable reactions to crisis or challenge. How reliable are they under stress? When the price of oil reached astronomical heights, were you prepared? Can you count on OPEC to keep your best interests at heart? What about their past track record for taking sound actions?

Let's take an example in your daily trading. Suppose you have taken a trade and the bottom drops out of the market. Suddenly, the cable goes out. What contingencies do you have in place? Even if the situation is extremely difficult, you need to move with confidence. That confidence will come with careful planning.

Losing Opportunity

In observing your own patterns of behavior, do you know what sets you off and makes you angry, anxious, worried, defeated, miserable, or frightened? Did anything happen today to make you feel that way? Search for the triggers to those deep-seated, negative feelings so that you know what you can expect to create them. It is not a question of whether or not these feelings are valid, because all feelings are valid. The important thing is that you know that you are eventually going to get over these feelings and the situation that triggered them. Look back. Imagine the time you spent being angry, anxious, or miserable more than you needed to feel and realize the amount of time you wasted and the lost opportunities.

Why is it important to put the negative feelings aside as soon as possible? Let's suppose that you have taken a big loss in the markets. Afterwards, you spent a great deal of time feeling angry, upset, fearful, and distraught. Will you be able to see the major opportunity for a winning trade that is following the loss? Will you be able to capitalize on that opportunity if you are unable to see it because you are consumed with feelings of inadequacy due to the previous loss? The undue attachment to negative feelings usually comes at a great price. This price can also occur in your personal life. If you are still suffering over a loss in the markets or a rejection in your personal life, you may miss out on a wonderful relationship that is available to you at this moment. Most opportunities have a very brief shelf life, especially relationship and market opportunities.

Exercise

If you do not work on your life planning with contingencies, negative experiences will most likely result in prolonged negative emotional reactions. To abbreviate the duration of these reactions, follow these steps:

1. First, you have to acknowledge to yourself the emotions you are feeling and the story that you have created about the experience.
2. As you acknowledge the story you have created for yourself, pull back from it and go to the big picture.
3. As you observe the situation that is creating the negative emotions from the greatest distance you can give it, ask yourself, "How long do I really want to be in this state?"
4.  As you ask yourself this question, focus your attention on the part of your abdomen where your navel is and take three deep, long breaths.
5. Center yourself by placing your focus on your middle and see a brilliant light going through you. Maintain your focus on your navel area.
6. Now, use this highly empowering phrase: "We can do this!"

This phrase, "We can do this!" means that whatever the challenge, you will be able to overcome it and that you will not be doing it alone. You are acknowledging the fact that you are not all-powerful and omnipotent. However, with the aid of the Universal Power, you will be able to prevail. You are recognizing the fact that, with God, all is possible. It is not important that you believe in God to tap into the power of this resource. You are giving a message to your neurological system that it needs to be directed in a powerful way to succeed.

Once you center yourself and utter this phrase, you are well on your way to limiting the damage that will occur in the worst situations and becoming a successful survivor. Empowered with this message to your neurology, you will find yourself being able to think creatively and take the kind of audacious actions that many crises require for a successful outcome. I have often found that successful survivors had already considered the possibility of a similar crisis or set of circumstances occurring. As a result, they had a rough idea of how they would react and what they could possibly do to survive.

For example, one of my most successful clients is a trader whose family had to escape from a totalitarian political system. This young son was primed to handle all of the crises and catastrophes that he encountered later in his trading as a result of all of the planning and courage that was required for his family's successful escape. He understands planning, danger, and risk. But most of all, he understands the power of believing in the outcome.

Conclusion

In the midst of the worst possible circumstance, most people are angered and frustrated by the statement that there is opportunity behind every bad situation. Even if that is true, the unprepared get stuck in their reactions and negative feelings so that they cannot see or capitalize on the possibilities.

Regardless of what happens, it is possible to abbreviate the duration of the power draining emotions and thoughts to seize the opportunities hidden behind a catastrophe. The first step to making the best of the worst experience is to plan for its occurrence. The second step is to arm yourself with the best possible psychological defense against emotional paralysis by using the exercise outlined above. A life plan that includes your resources, what you know, and your contingency responses is like going into battle with superior weaponry. Your chances of emerging unscathed and victorious are improved immeasurably and you will have made the best of the worst that can happen.