It doesn’t matter if you’re a trader, poker player, sports bettor, professional gambler, investor or business owner. You have felt the pain of losing money regularly.
But why does it hurt so much to lose money?
And why do you deal with it well some days and on others you completely lose your head?
I want to introduce you to a very simple formula:
I call this the General Theory of Pain. But I can’t take credit for coming up with it as I believe some smart cookie from MIT cooked it up. Let’s look at its components in detail.
Pain is a sensation. It’s the immediate feeling you experience when something goes wrong. So if you’re a poker player, it’s when you lose a big pot. Or if you’re a sports bettor, it’s when you lose a big bet. And if you’re a business owner, it’s when those unexpected disasters occur that cause you to dip into your cash resources.
Pain is inevitable. It will always be experienced beclse it’s the body’s natural reaction to threats and harm. And the simple fact is losing money hurts because it harms us. It reduces the amount of money we have to spend and even use in our professions.
The other side of the equation is our reaction to the pain. There are three parts to our reaction to the pain:
- Physiological effects
- Channel of frustration
There are quite a few physiological effects associated with the pain of losing money. It’s common to feel our faces going hot when we are feeling the stress. Our palms get sweaty. And if you place close attention you can often notice a lump in your throat. This can feel suffocating when the pain of the loss is very large.
We all engage in self-talk after we lose a sufficiently large amount:
“OMG! I cannot believe I’m so unlucky”
This is the first thought that arises immediately following the pain. We all tell ourselves this. It’s a natural reaction to what has just occurred. And depending on your general level of happiness, personality and experience of handling that particular situation it affects what happens next.
Emotions lead to a negative narrative and/or an outwardly act. Feelings of anger, annoyance and frustration are the main emotions we experience. At first they’re just associated to the situation but they quickly spread to other channels:
- The people we love,
- The people we dislike/hate,
The people we love includes our partners, our families and our best friends. They can easily be affected by our reaction to the pain of losing money regularly. Have you ever noticed yourself snapping at your partner when you’re losing money?
If you’re working with someone you dislike they can be an outlet for your rage. It’s less common though. Because we don’t have the same connection to those we dislike or hate. And so we are less comfortable just blurting out. However an act towards someone we hate can be very aggressive and even violent. But with friends that are only fairly close there isn’t the same kind of reaction. We tend to just share our stories of bad luck.
Certain personalities break objects in anger and frustration. This can be a real problem when the objects are of real value. I know friends who have broken laptops and smashed their phones following a circumstance of “bad” luck. A rather severe reaction to the pain of losing regularly.
Jealousy is quite common too:
“How is he/she/everyone else so lucky that they don’t have to deal with this?”
This is the envy directed towards our peers. For example in poker this is often directed towards another player for whom it’s going well.
“He/she runs so well! How is it possible?”
And how about ourselves? The tendency is to enter a negative narrative. And it’s typical to enter a sad or depressed state.
OK. Ok. That’s a decent amount of intellectual study. There is a key takeaway here:
Pain cannot be controlled. It occurs naturally. It’s our reaction, which is the key component that we can actually have an affect over.
If we want to control our reaction to losing money we have to look at the key influences to our reaction. Let’s backtrack a tiny bit. The main influences to our reaction to losing money are:
- General level of happiness
Now in life in general, I am a big advocate for doing the simplest but also most effective thing I can. Which means we don’t want to go changing our personalities. You may not realise this: Our personalities are not set in stone. But they are complex and have formed over our whole lifetimes. They’re influenced by many factors: our background, parents, culture, friends, interests etc.
In order to change your personality it requires a lot of effort. So let’s skip over that.
Instead on this blog we are going to work with our general level of happiness. Right now you probably believe happiness is something you cannot control or have an EASY direct influence over. I’m going to show you that you can. And I’m going to provide you with the incredibly simple things I do every day to manifest a more positive mental state.
Not only that, we are also going to boost our level of expertise in dealing with losing money. In a way that’s been used for THOUSANDS of years.
But we are going to use modern technology to our advantage. Don’t worry you won’t need any fancy equipment; just a smart phone and any pair of headphones.