Fortunes are made and lost in the markets. Bubbles and euphoric market cycles make and break people. But they also vastly skew people’s expectations of what is possible, and what is reasonable. The money made in a euphoric cycle, even if kept, is not the money made in a flat or sideways cycle. Varying strategies that can set you up for long term success in quieter markets still don’t compare to 11,000% gains in one volatile instrument.

When people first enter the market, it is usually the pull of these euphoric events that lure people in. They want to be a part of it. And often they are. For a time. Then the hype dies down, the money train stops, and it’s time to hunker down and strategize your next moves.

It can be hard when involved in the daily hype, to move towards a slower market, and to re-align yourself with a slower strategy or system. Expectations of what you can do, and what others do need to change. This is true for every sector, even outside the markets. Imagine selling Christmas ornaments all year long. Or Halloween costumes in April. Hype cycles are like Spirit Halloween - they pop up when the going is hot, then they hunker down until it’s time again.

It’s the expectations in between that will largely define the type of trader you want to be. Some will decide this “in between” is not worth it. That it’s better to focus on larger time frames, get in for the larger moves, then get out and patiently wait for your next A+ longer setup.

For day traders, this is where the shift happens towards strategy deployment, preparation and learning. Often met with unrealistic expectations of reward. According to ZipRecruiter, the average salary of a day trader is 94,000 per year. I don’t really know where this number comes from, and I have no clue how accurate it is. But even if it is, that’s certainly not the millions people think of when it comes to large market hype cycles. And to break it down even further, it’s 45 dollars per hour (and that doesn’t account the hours of pre and post market prep and weekend study and review).

When it is viewed this way, really broken down, I think it is when people start to dissociate. A day maker becomes a thousand dollars even when your goals for the year are not 250k. Accepted losses of $200, four or five times a day adds up to more than you meant to risk in a week. It’s these little time frames where we get caught up and forget to see the forest for the trees. And then can’t figure out why things aren’t progressing, why we aren’t making more, and assuming that everyone else must be making thousands on trades, when reality tells us that 45 dollars in an hour is actually the average. We know we’re supposed to compound. We know we’re supposed to go for base hits. But even in our minds compounding means $10k to a million in one year at 1%/day. A feat I still have yet to watch someone do via simple daily compounding. (More likely to happen in a hype cycle year, which then the job becomes to hold it.)

None of these things, compounding, daily targets, base hits, hype cycles are actually out of reach. But they all skew our immediate and short-term expectations. If you have a job with a paycheck, you don’t finish every hour of your work and say - ok that was $30 right there. You let it accumulate, and then you see the finished product on a weekly or biweekly basis. The same must go for trading in order to keep our expectations in line. Establish your risk and reward that is in line with your own account size, and reasonable goals for daily action while you patiently await the next hype cycles. Then turn off the P&L.