Day-Trading Attention: Why Advertisers Must Think Like Traders to Win
Lately, I’ve been very fascinated about the intersection of advertising, e-commerce, and trading. And this idea of applying frameworks for decision making that come from trading the markets and technical analysis to entrepreneurship and advertising decisions.
I’m currently reading Trading in the Zone and I wanted to share some of the key takeaways I got that are helpful for my fellow marketers.
As someone with a business background and experience making money in the markets, I’ve seen firsthand how errors in thinking and mindset can get you fucked in the market.
As I’ve been running my e-commerce company and spending millions on advertising, I‘ve been forced to think more rigorously around the advertising, product, and marketing decisions. When you’re spending your own capital on ads, everything counts. And you see the outcomes of all of your decisions in real time. You only eat what you kill. The goal is to manage risk while preserving upside with each ad or campaign or offer we launch.
The more and more I‘ve gone through different business cycles, the more I see how marketing decision trees start to look like literal trades.
Lately, I’ve been combining technical analysis and price action analysis to better understand what was happening at each stages of my marketing camapigns. This helps me better identify the correlation between advertising and revenue, customer acquisition costs, and profitability
This epiphany led me to read ‘Trading in the Zone’ to understand how you become a better trader. As I’ve been going through the book, it’s been talking about some of the key psychological mistakes that traders make. As I went through the list, I realized that the psychology mistakes that kill traders are the same ones that kill entrepreneurs, marketers, and advertisers.
In fact, the psychology lessons go so far beyond trading. They help you look inward to better understand your trauma and your realtionship with fear and greed. This book will help you become more emotionally well-adjusted in all aspects of life.
It reminds me of the idea that everything is a trade. The woman you date is a trade. This product you’re launching is a trade. This offer is a trade. This promotional campaign is a trade.
So if that’s the case, how do you go about making better trades and avoiding the key pitfalls?
These are the reasons behind most trading, business, and marketing mistakes
In the book, the author talks about how the four most problematic fears that traders face:
- Fear of losing money
- Fear of missing out
- Fear of leaving money on the table
- Fear of being wrong
As an entrepreneur growing their business, you also have to conquer these fears in order to be successful
Fear of Losing Money
A lot of people fear losing money and that prevents them from exploring new opportunities within their business model or their career because they’re afraid of investing in themselves.
This reminds me of an organic email campaign I was recently working on. We were faced with a decision on whether or not to add paid acquisition to our marketing mix. It was a tough question because the entire premise of the campaign was to use organic marketing to reduce costs of acquisition.
So I was faced with this decision on whether or not to turn on ads to try to juice our revenue. My initial position was No, we shouldn’t. But in reflecting, I recognized that maybe a part of this recommendation was founded on the fear of losing money. The campaign was performing well. We made about $20k in a single weekend at $0 cost per acquisition. And I was so happy about that, that I started to become fearful of risking any additional capital unnecessarily. And so boom, you see how that fear of losing money manifests itself. And this can easily cloud your judgment.
Fear of Missing Out (FOMO)
Fear of missing out manifests itself in entrepreneurship in the form of “shiny object syndrome.” In business, trends and fads are a delicate dance. They can be a trampoline that propels you further and gets you free attention. But if you make the mistake of overindexing on fads, they can also be the kiss of death.
If you’re always afraid of missing out on a fad, you might push yourself to sell and adopt a product that might not make sense for you. And that could end up setting you back, confusing your customers, and creating a distraction for your team.
Fads can be problematic when they make you sacrifice a proven money-making business model for a trend with no real quantifiable ROI.
The Fear of Leaving Money on the Table
The next fear is the fear of leaving money on the table. It’s related to the fear of missing out, but it’s more, focused on a specific transaction because it’s more tangible.
This fear may cause you to price a product way too high and so you miss out on a lot of demand.
Fear of Being Wrong
In entrepreneurship, sometimes you may be so afraid of being wrong that you might not leave a failing business model soon enough. Which ultimately results in you losing money. This happens to a lot of small businesses. They make some money in the beginning but they end up losing it all shortly after. Why? Because they didn’t really understand what caused their success. So they end up doubling down on the wrong thing, and their ego is so invested in preserving their facade, that they’re unable to pull back and reset.
A great example of this shows up in Alex Hormozi’s $100M Offers. He details the story of a friend of his who was in the newspaper industry and was running a structurally and fundamentally sound business. However, he found himself losing money every year and he couldn’t understand why.. he was doing everything right and customers were happy, so what gives? He didn’t realize the challenges he faced were because he was declining market. He was so attached to his business that he wasn’t able to look at it objectively so that he could pivot before everything went down to 0.
When you’re in a declining market, no matter how good you are individually, your upside is not only capped but continues getting smaller and smaller. As time goes on, you’re more likely to continue losing money. And if you’re at the top of your industry, you’re even more vulnerable.
As Hormozi details, his friend would’ve been wise to sell his company quickly once he saw the warning signs. But if he was so attached to his fear of being wrong, he wasn’t able to think objectively.
Wrapping Up
With these examples, you can start to see how traders and advertisers are more similar than many would’ve originally thought.
These 4 fears above are the reasons most small businesses and founders are unable to create consistent success. They’re unable to handle those fears. This makes it hard to make good quality decisions. It also makes it hard to analyze what’s happening around you.
This is why, I’m very bullish on building a body of knowledge around day trading attention. Gary Vee’s latest book is Day Trading Attention. He talks a lot about this concept and I think that day trading attention is the biggest arbitrage opportunity that exists in the world.
I believe advertisers can benefit from applying greater analytical rigor to day-trading attention. I’m excited to continue exploring this topic because I think that if you understand trading psychology it will make you a better business person, a better marketer, and a better person.
