The importance of building resilience

Why do we need to develop resilience if we want to become successful in life and in trading?

We all have seen people around us who cannot get their lives back on track following a death in their family, the loss of a job, or the end of a marriage or other romantic relationship. Why is it that only some people are able to rise from the ashes like the phoenix and start afresh? What is it about the characteristics of their personalities that set them apart from others? How is it that when Dave Mustaine was fired from Metallica, he took all of his anger and ambition and started Megadeth, an amazing band that was just as good as his former band, but when Pete Best was asked to leave his legendary band, the Beatles, he fell into a deep depression and alcoholism and could never get his career back to superstar status? The answer to these questions is resilience, which measures how mentally tough a person is.

Resilience is one of those mysteries of the human psyche that fascinates you but you never truly understand. Though it is a good quality to have, resilience is neither ethically good nor bad. It is merely the skill and the capacity to be robust under conditions of enormous stress and change.

Sometimes we all think, How is it that some traders will succeed yet many others will fail, despite having the same education and tools? Why do very few new traders make it and others fail at trading? The reason is that, those that succeed often have resilience.

There are many people who experience real hardships, but they don't break down and lose strength. They persist, regardless of how bad things are for them.

People react very differently to challenges in life. In 1983, a talented young guitarist, Dave Mustaine, was kicked out of his band in the worst possible way. The band had just been signed to a deal to record their first album. But a couple of days before recording was to begin, without any warning, discussion, or dramatic blowout, the band asked Mustaine to leave. They put him on a bus the same day. As he headed back home to Los Angeles from New York, he kept asking himself how this could have happened. What did he do wrong? What would he do now? By the time the bus hit L.A., Mustaine had recovered from this bad experience and all of the feelings of self-pity. He vowed to himself that he would start a new band, and he decided that this new band would be so successful that his old band would regret their decision forever.

He worked hard; he spent months recruiting the best musicians he could find, wrote dozens of songs, and practiced religiously. The combination of anger and ambition led him to eventually form the legendary heavy metal band Megadeth, which sold more than 38 million albums and toured the world many times over. Today, Dave Mustaine is considered one of the most brilliant and influential musicians in the history of heavy metal music. The band from which he was fired was Metallica, one of the best-selling music bands ever. Although Mustaine never reached the same success as the Metallica members, he put his life back on track. This is resilience at work.

In contrast, when Beatles was formed in 1960, Pete Best was one of the members. In 1962, after receiving their first record contract, the other three members quietly got together and asked Epstein to let Pete Best go (probably because he was too conventional to be a beetle). No reason, no explanation, no condolences; they just wished him the best of luck. As the replacement, the band brought in Ringo Starr. Within six months of Best’s firing, the intense fan frenzy of Beatlemania erupted, making John, Paul, George, and Ringo four of the most famous faces on the entire planet. The Beatles became the best-selling band in history, even to this date, with estimated sales of over 800 million physical and digital albums worldwide. Meanwhile, Pete Best fell into a deep depression and alcoholism. Things went worse for him, until he attempted suicide in 1965. Pete never recovered from the setback like Mustaine, because he lacked resilience.

In the movie, The Founder, Ray croc says to himself standing in the mirror before giving a speech, "Now, I know what you’re thinkin’. How the heck does a 52-year-old, over-the-hill milkshake machine salesman... build a fast food empire with 16,000 restaurants in 50 states and 5 foreign countries... with an annual revenue in the neighborhood of $700,000,000.00. One word...persistence. Nothing in this world can take the place of good old persistence. Talent won’t. Nothing’s more common than unsuccessful men with talent. Genius won’t. Unrecognized genius is practically a cliché. Education won’t. Why the world is full of educated fools? Persistence and determination alone are all-powerful.”

Despite many, many challenges, Ray Kroc was able to remain persistent because he had resilience. Nothing could break him. At one point, things were so shaky for McDonalds that Ray Croc offered to sell half interest in McDonald’s for $25,000—and no one accepted his offer. If anyone had, that person would have become a billionaire over the years. Since, no one was there to help him out, he navigated through the turbulent times all by himself and came out stronger.

More than education, experience, and training, a person’s level of resilience will determine who succeeds and who fails. Life would throw curveballs after curveballs, but we all need to remain persistent. Even in trading, the market would often behave erratically, and sometimes there will be treacherous price action that would trap you, but you need to get book your losses, and keep looking for further trades with good risk-reward ratio.