Adam Sarhan - Psychological Analysis – How to Make Money, Outsmart the Market, & Join the Smart Money Circle: How to Make Money, Outsmart the Market, and Join the Smart Money Circle (Wiley Trading)

1. Chapter 5

Adam Sarhan

Copyright 2022 by Sarhan Capital LLC. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.

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Library of Congress CataloginginPublication Data is Available:

ISBN 9781119282044 (Hardback)
ISBN 9781119282129 (ePDF)
ISBN 9781119282112 (ePub)

Cover Design: Wiley
Cover Images: artmakerbit/Shutterstock, chart Wiley

This book is dedicated to everybody I love.
Including you.

I want to thank Leo Melamed, the man who literally created stock market futures, currency futures, and treasury futures after running his idea by the legendary economist Milton Friedman. Leo's story is remarkable, and his knowledge, experience, and wisdom is second to none. Leo, thank you for your friendship, guidance, and support during my journey. Leo sent me this excerpt from his wonderful book, Man of the Futures, and he shares timeless wisdom about psychology and futures trading. The same underlying principles apply to trading and speculating in just about any liquid and freely traded public market in the world. The lessons outlined in this book are designed to help you thrive in all market environments.

Do you think I can make money speculating in futures?

I have been asked this question, in one form or another, countless times. Unfortunately, it is a question without an easy answer. I have seen seemingly wellqualified people fail in their attempts at futures trading and investments. I have seen the least likely type succeed. Consequently, I have learned never to make a definite evaluation of a person's prospects until after I have had an adequate opportunity to really get to know the person and observe his or her actions and reactions to market situations.

It would be nice if there was a simple test which one could take to determine the issue. Much of it has to do with psychology. In most respects, this is the overriding ingredient that divides winners from losers in futures trading. The type of person you are, i.e., the way you react under pressure? After you enter the market will your judgment be influenced by emotion based on profit or loss? Your philosophical approach toward money? Will other life concerns or circumstances affect your decision making? Will you be foolishly swayed by the actions of others? Conversely, will you stubbornly refuse to listen to good advice? If you find you are wrong, can you openly admit error in the face of defeat? Remember, you will have to admit defeat in broad daylight. Your broker will always know and, eventually, so will your family and friends.

In futures trading, one's personality and emotions are stripped of customary buffers and aids that offer comfort and assistance in most other stresses of life. Moreover, in trading, emotional problems are enormously magnified because you are dealing with moneyyour money! Here, your personality, your emotions, your character are tested as nowhere else. The normal tranquilizers or accepted diversions which we consciously or unconsciously lean on in other fields of endeavor are not available in this challenging field.

Here, you cannot adjourn the meeting to think things over, you cannot temporarily turn to a different subject, you cannot postpone a decision to consult with an expert or friend. Nor can you take time out to relax. The market goes on with or without you, the moment of decision cannot wait. Your emotions and your psychological makeup must be such that they will not interfere with a prudent decision at the instant when you must make it. Your personality cannot be such that it requires some form of diversion before you can rely on your judgment at a critical moment.

These psychological elements are but a sampling of the important essentials in determining your probable chances of success or failure in futures tradingquite apart from luck and being right on the fundamentals. In futures trading, more so than in most other fields of endeavor, one's psychological makeup is critical.

Best wishes,
Leo Melamed
Chairman Emeritus, CME Group, Inc.

This book will help anyone who wants better results in their life, with their money, and in the market. Most people suffer (lose money or are frustrated with their performance) in the market and my goal is to change that by teaching you how to win (make money) by taking control of your mind, so it stops controlling you.

This book has the potential to change your life. Why? Because the stock market has the potential to change your life. Keep in mind, real wealth comes from being fulfilled, by being happy, and by winning (in whatever activity you put your mind to). This book will show you how to think like a winner and bring out the best version of yourself (even when you don't feel like being it).