This may seem counter-intuitive at first, yet the more one thinks about it the more it makes sense. - In fact it seems to defy everything we have learned in our modern society about how we approach the challenges we face in the world. Basically, we are taught to be winners, to ''go for gold', 'the winner takes it all', 'aim to be a winner', 'got to be in it to win it', etc. In trading however, so strong is this desire to win, that more often than not traders make crucial mistakes which constantly undermine their performance and their ability to be a winner.
In trading you are up against two enemies, yourself and everybody else. - But 'everybody else' is in the same boat as you, they are up against themselves and everybody else. Therefore it stands to reason that everybody has the same principal enemy - themselves. - It is this hurdle that all traders have to overcome in order to be successful: You may have noticed the quote I maintain at the top of this blog, it is a quote by Sir Edmund Hillary, ' It is not the Mountain we have to conquer, but ourselves'. - As a trader this was my core philosophy, and now as a 'trader performance and psychology coach', this is a principal I try and instill in my clients.
One of the biggest hurdles I come across is peoples inability to see themselves objectively. Thus how can one overcome one-self, when we cannot truly see them-self? - In his book 'Thinking Fast and Slow' Daniel Kahneman makes the assertion that 'We're blind to our blindness'. This is one of the challenges all traders face. - I am going to deliberately leave that point hanging, since I think this is something that you as a reader should try and consider 'yourself'. - However I will finish with one of my favourite quotes, this time from one of my all time heroes - Muhammad Ali -"Only a man who knows what it is like to be defeated can reach down to the bottom of his soul and come up with extra ounce of power it takes to win when the match is even."
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Steven, spot on as usual, thank you! However, I don't know whether you remember the quote that goes "To know and not to do, is not yet to know"? By this I mean that most (semi-) advanced traders probably are more than fully aware of the problems/challenges mentionned in your article, but suffer from which I call "impulsive behaviour" once in the markets. They have their trading plan in front of them and in their minds. They know themselves, their strenghts and weaknesses. And yet, it happens they pull the trigger on a trade (entry, exit and anything between)as if their finger was forced to do so by someone else. Theoretically and on the conscious level a "Hero", but in practice and on the unconscious level, well..."Zero". How to counter this? Thanks in advance for your advice!
ReplyDeleteInteresting quote not one I am familiar with.
ReplyDeleteThe point you make is however characteristic of all traders, no matter how long they have traded. - We are human, and that is our strength but also our weakness. - It is our strength in that we have the ability to think logically and rationally, and to make sense of our world by questioning and learning, however the conscious part of our brain is extremely limited in capacity. We are actually mostly non-conscious beings, what I mean is that by far the greatest part of our brain processing happen at a subconscious level, much of it is trained by our conscious which then becomes habitual sub-conscious processes. I.e. As I type this I don't even think what I am doing in the typing process, however when I first learned to type, (probably in my early 20s) it was a slow conscious process until it became a habitual (non-conscious behaviour) process. - The problem for humans, where it is also a weakness is that we have constructed a very complex world around us, and then have to survive and thrive in it.
Many of our ingrained thought process which become habits and behaviours are taught to us at a young aqe, we spent the developmental years of our life as young children, growing children, then as adolescents and young adults, absorbing, learning and developing behaviours and habits, from our parents, teachers, peers, and the world around us. We also have survival behaviours, which are part of our make-up, which are also part of our non-conscious process deeply ingrained in us. These behaviours ideal for survival in the environment which we mostly survived in for millions of years and or helped us grow and learn in the modern world. But few of these are ideal for thriving in the financial markets. Then there are behaviours in the financial markets, which are ideal in one situation or environment, and become automatic, but suddenly do not work in a changed or new environment, e.g. I have recently coached someone who has traded for over 40 years, who was a very successful trader for many years including running major dealing rooms and hedge funds, yet now he has had to change his trading to a different set of circumstances (Lets call it retirement trading), the behaviours which worked for him in the past were now no longer relevant.
Countering the way we think, which so often cause to become zeros instead of heroes is difficult. Each case I coach is unique, thus a solution I work with for one is different for the other. One things I do ask all my clients to do, though it is of course optional, is to maintain a journal, journals used properly are wonderful tools for continued learning and constant improvement and self-reflection, also use them to set goals. - I have waffled on far too long so I will leave it there, but i hope in some small way I may have helped answer your question.