$49,700,000,000 Net Profit And Keeping Easy Things Easy
I’ve been bringing up a couple of cognitive biases in these posts.
There’s like 25 of them that we teach in our programs, but one of the more important ones is the contrast bias.
Essentially, these biases are things that cause you to make mistakes in your trading.
Understanding these concepts directly translate into massively positive results in your trading.
I’ve not talked about these in public before, because these are very powerful concepts that you mustn’t take lightly.
If you look back at your trading or investing results, any time you didn’t get something you wanted, it’s most likely that you succumbed under one of these biases.
You can avoid most of your mistakes in trading if you understand how your mind functions, because you’ll have root level understanding of what’s actually going on.
The contrast bias that I’m going to be talking about today is something that you can flip around and turn something difficult such as trading into something really easy.
$49.7 Billion Net Profit
Here’s how I came up with this.
I often meet people on Twitter when I share things for free, and I also mentor people in trading and sometimes they say things like “man, this thing that you gave me to read is so hard, how in the world am I ever going to do this?”
I was reading about the most profitable hedge fund in the world that has made $49.7 Billion in profit.
It took about a thousand of highly educated employees from the best ivy-league schools in the world, over 43 years and they currently have over $160 Billion worth of funds under their management.
They had Ray Dalio, advanced computer algorithms, and the best people in the world educating, consulting and working for them to create the best possible profit number every single quarter.
Remember, they had hundreds of Ph.D.’s that have spent their lifetimes learning economics, finances, and trading from the best people in the world in schools like Harvard, Yale, and MIT.
And finally, after 43 years of possibly trillions invested (don’t know the exact figure) in funds, human capital, and resources, they’ve figured out how to make $49.7 Billion in profit.
That is hard.
Anything else that you and I are trying to figure out, is basically easy in contrast.
So, whenever somebody tells you that “trading is hard”, just think about basic trading.
You meet people that say “I’ve tried every method and I still can’t figure it out”.
And I’m like: “Is it harder than managing a $160 billion dollar hedge fund?”
No, it’s very easy in comparison.
In fact, it’s so easy that if you take this mindset, you’ll be like Jeff Bezos who said: “we innovate out of our problems”.
So, I’ll give you some practical examples of how to use this tool.
For most people, this is like the “pinnacle” of their trading career.
So, let’s go over a couple of little tools I use in my mind.
#1 Break it down into smaller pieces
First of all, what is a million dollars spread out over a year?
It’s roughly $2739 a day.
That sounds a little bit easier.
If I asked you that could you figure out how to make $2,7k in 1 day, could you do it?
More people are going to think it’s possible because almost everybody has once found a low-cap gem, made a successful trade, or invested in a good asset.
So, let’s simplify it even more: to make $2,7k a day, how much do I need to make in an hour?
I usually work around 10 hours a day, so it’s around $270 (2,7k/10).
Now, does that sound doable? Could you make $270 an hour?
There are lots of people making $270 an hour.
Remember, when I was starting out in, I only had couple hundred bucks from my real estate sales job.
I was 19 years old, I was still doing my day job, and I started off my mining Dogecoin.
That was one of my first trading experiences.
I made $25,000 in 6 months and I was stoked. It was literally a ton of money.
Then, my second big hit was when I started trading properly.
I invested 10k in Darkcoin (Dash) and it went from $1 to $10.
So, I made $90,000 in profit which was a ton of money for me at the time.
I remember thinking “man, this is easy”.
And then I thought to myself: “ok, I’m quitting my day job”, because back then the contrast bias I previously had towards making money got broken off.
That was the beginning of my trading career and from there I never was intimidated by the next thing.
So, just like I said: if you want to make $1,000,000, shrink it down to smaller pieces.
When I made that Darkcoin trade it took me only like couple hours, so I made like $30,000 an hour.
So, I was making more than $2700 an hour and because of that simple understanding, it leads to my other successes.
Most people in the world are afraid of trading and doing big things.
It’s like Alexander The Great said:
Through every generation of the human race, there has been a constant war, a war with fear.
Those who have the courage to conquer it are made free and those who are conquered by it are made to suffer until they have the courage to defeat it, or death takes them.”
So, you can basically be in one of those camps for the rest of your life, and the simplest way to overcome your fear whether it’s making $270/hour, learning how to trade full-time, or investing your resources in something, is by starting off by messing with the contrast.
Start with the $49.7 billion dollar profit: they can make $49.7 billion in profit, how can I make $270 in an hour on average?
And the answer is usually quite simple.
The second tool I use is:
#2 Surround myself with people way above my skill level
This reminded me of a story from Arnold Schwarzenegger:
Arnold had competed in bodybuilding for quite a while, but he lacked in one area on his body: calves.
He looked to his earliest childhood inspiration, the great Reg Park, for guidance in developing his calves.
Park’s advice? Simple, you’ve got to go heavy and hard. Do 1000 pounds instead of just 200,300 pound weights.
After that Arnold said “that’s impossible, I’m going to tear my calves”, but he started off with 500 pounds.
And the next thing you know he was up to a 1000.
And the simple answer there was that once he saw someone else doing it, the contrast flipped.
You see this same pattern in the 4 mile minute where after Roger Bannister broke it, literally 4 or 5 people did it within a month.
It wasn’t that these people weren’t physically capable of doing these things, their mind was literally holding them back.
It’s the same thing with spending time with friends and mentors, like Jim Rohn says:
You’re The Average Of The Five People You Spend The Most Time With
Even more important is that you’re setting up your contrasts.
Instead of comparing yourself to your friends who make 2–3k/ month from their day jobs, compare yourself to these guys.
If Ray Dalio figured out how to grow his net worth to $18.9 billion, maybe you can figure out how you can make $270/hour off trading on average?
So, now when you read those first 7 pages of Technical Analysis of the Financial Markets book and you’re like “man, I’m so tired”, you can compare yourself to these guys who literally read these things for breakfast.
It’s not like people like Paul Tudor Jones or Ray Dalio are 10,000 times more intelligent than you.
It’s just that they’ve simply mastered their craft and are doing different things than you are.
#3 Keep easy things easy
Sometimes I talk with beginner traders 1-on-1 and they are always busy and stressed out.
I ask them “what’s going on?” and it’s always something like “I got REKT” or “should I go into this position right now?” or “I’m just too busy doing my day job”, or something similar that.
You must remember that you only get 3 glycogen (=energy in your brain) spikes in your brain each day and it’s up to you to decide how to use them.
Most people’s brain is filled with thoughts like “what’s Bitcoin doing in the next 15 minutes?” or “is this next news piece going to moon rocket this coin?”.
The truth is that you must save your glycogen and use the cognitive load behind it to more important tasks like honing your strategy, creating your framework for long-term trading success and learning about what are the best people in the world doing.
The reason these people who have never accomplished anything and have 0 experience in trading are so stressed out, is that they use their cognitive load thinking about things that are really irrelevant.
Instead of doing that, you must:
- Automize the easy tasks: why don’t you just use a simple Excel sheet to calculate your positions beforehand, so that you no longer have to worry about watching the charts all the time?
- Save time off trivial things: are you spending 2 hours a day commuting to your day job? That’s up to 28 hours a week. That’s insanity. Move closer to your job or find a new source of income. Do you buy groceries every day? Create a list and get them once a week. Do you spend 3 hours a day on Instagram? Check it only 3 times a day.
- Re-invest that cognitive load into things that move you forward: are you reading enough books about economics, finances, and psychology? Are you getting mentored by an experienced trader? Are you constantly becoming a better trader or are you just staying in one place?
The world is a competitive place with over 9 billion people who all want to make money.
We also live in capitalistic world which is economically competitive.
While massive success is possible, you’re not conditioned for that unless you’re born into a wealthy family.
That’s why must use the contrast bias to your favor, but also avoid getting used by it.
Most people are getting used by contrast bias:
- They make hard things easy: they think that crypto trading is something that can simply be learned by trial & error
- They make easy things hard: they overthink things like singular trades, market cycles, and emotions
- They don’t use their daily cognitive load efficiently which leads to long-term failure
So, just like I said it with the $1,000,000 goal:
- You use contrast bias to make things simple by breaking them down into smaller pieces ($2700 a day, $270 an hour..)
- Use it to find out what you need to do in order to achieve it: compare yourself to people with massive success, not your friends.
- Avoid something Warren Buffet called “sucking your thumb”: wasting your time on meaningless things.
The people who make the most money aren’t always the smartest ones, or the ones who work the most hours.
They are the ones who have the right skill set in the right market.
They’re the most adaptable ones.
If you’re not making as much money as you want, then you have to ask yourself:
“Do I have the right skills? And am I in the right market? Am I doing the right things?”
If the answer is no, then you’ve found the reason.
All you need to do is get the right skills, be in a better market, and do the right things.
Now if you’re looking to make massive profits, I would suggest you first get down the skill of trading.