Yes, there is a formula, for those mathematically inclined.

Happiness = Reality / Expectations

That’s it.

Expect less and you will never be disappointed. This works in every day life as well as on the market.

In trading, set your target price to a reasonable 6-8%. Some folks pare it down to even 5% net. There is a much likelier probability of reaching your modest gain than if you aim higher. SPY provides ample opportunities every day to earn 6%. Once you do, look for the next setup. Consider it easier to earn 4 or 5 times 6% gains than necessarily 24% or more in a single trade, and without the stress. When you put up a sell order, simply lock it in and sit on your hands. It will curb your greed and ultimately result in long term financial gains.

In every day life, reduce your expectations of the world around you and see how much happier you will be.  For example, when I would plan every aspect of a vacation, it would be an absolute set up for disappointment. The weather would not cooperate, so there goes the water park. Kids would become angry, bored and irritated, ultimately annoying the adults and everyone’s in a bad mood. Rather than pre plan that water park activity, simply wait until the day rolls around and decide then. If it rains, head for an indoor activity instead. On a broader scale, my best vacations were the ones where no planning was done whatsoever… just get in the car and drive. When we get there, we get there. The journey became half the fun and the memory was all positive.

Reducing your expectations can be difficult because many of us learned from an early age that we should always do and expect the best. While it sounds inspiring, the reality is different. No, you will never get prompt service when you call your cell provider. The cable guy will not show up on time and unless you’re at a five star restaurant, expect the waitress to be rude and forgetful. Accept it and when it happens, you should never be surprised. It is unfortunate but that’s the world we live in. Forget what MapQuest tells you; you will not get from Newark to Times Square in 34 minutes. Expect to spend at least an hour in traffic and you will not be shocked. Instead, you will arrive happier and relaxed.

I apply this simple formula to many aspects of my life, including trading. When I used to reach for the ten bangers, I got mostly high blood pressure. When I magically hit my 6% gains several times a day, my account started to grow nicely and I could sleep at night. What a deal!

Of course, there are times when you should expect the best and nothing but, for example, with your trading mentor (us). We at DayTradeSPY strive to earn your highest expectations and won’t settle until you are a successful day trader.

 

Hugh

March, 2019