The Pain You Create by Avoiding Pain

I’m fascinated by a statistic that has nothing to do with marketing.

It's estimated that over 97% of people that attempt day trading fail - losing their entire investment in their first year.

That may or may not be surprising to you based on the mental image you have of the type of people that day trade. But here's what's really interesting to me about that statistic:

They’re not failing because they're making the wrong trades.

In fact, the average trader makes a profit on 51% of their trades. They're right more than half the time!

The problem is that their losing trades are one-and-a-half times the size of their winning trades.

The reason why this is true for 97% of traders highlights a major facet of how our brains work - and it might explain why you’re so stressed out.

Put yourself in the shoes of a typical day trader.

You believe the market is headed up, so you enter into a position betting that the price continues to increase.

You relax a bit as the price moves a few more points in your direction.

Then suddenly things turn south.

The market begins to move against you, and within moments your position is in the negative. Within moments, you're a few hundred dollars in the hole, and the price is still moving south.

What do you do? Do you cut your losses by exiting your position? Or do you hold out hope for things to turn around?

The logical thing to do is to close your position — the market is telling you that you’re wrong. But that is not what most people actually do.

Why?

Because your lizard brain has taken control. That primitive part of our brain that’s controlled by instinct rather than rational thought. Our lizard brains are programmed to do one thing: to avoid pain.

And the second you close that position, your losses become real.

As you see your losses start to build, your lizard brain is doing everything it can to avoid the pain you're causing yourself. As long as you're in the position, you have hope. The price can turn around. It could become the trade of a lifetime and make you rich.

With the hindsight that comes after the trade, the actual pain you caused yourself by keeping the trade open becomes obvious. You've thrown hundreds, if not thousands of dollars down the drain. But at the time, it felt like the best way to protect yourself.

And we're doing the same thing every day in our work.

Prioritizing your work is a balancing act between avoiding short-term and long-term pain.

You want to be focused on the big ideas that will move the needle. Fighting the long-term pains that stand in the way of your organization and its goals.

But every day you’re faced with a continuous barrage of short-term pains:

You have emails to respond to. Meetings to attend. Funnels to create. Web pages to update. Social media posts to write.

You’re not under the illusion that those tasks are going to be the thing that moves that needle, but the thought of leaving them unattended feels too painful.

Because the pain is immediate.

You won’t feel the benefits of your big ideas for months if not years, but you can already imagine the pain you’ll feel from leaving your CEO’s email unanswered.

So your lizard brain takes over. You move your big ideas down the list, and tackle those immediate tasks. That is the root of reactivity.

Meanwhile, the long-term pains get bigger and more painful. And like a day trader whose account balance is shrinking towards 0, you can only ignore that long-term pain for so long.

Our lizard brains are powerful, but it’s important to remind yourself that they were created for a completely different reality than we find ourselves in now.

It is built to function in an environment where daily survival is not guaranteed. Where every new piece of information could be the difference between life or death.

The first step in removing the power your lizard brain has over you and your work is recognizing when it’s trying to take over.