Trades: 4 / Winners: 3 / Losers: 1 / Break Even: 0
Scroll down to see screenshots of all trades last week’s trades…
[wp_lightbox_anchor_text_display_external_page link=”https://www.forexistentialist.com/wp-content/uploads/2015/03/ROBOS_2pc.htm” width=”900″ height=”728″ class=”center_text” text=”2015 Progressive Results at 2% Risk“][wp_lightbox_anchor_text_display_external_page link=”https://www.forexistentialist.com/wp-content/uploads/2015/03/ROBOS_RESULTS_2015-5percentRisk.htm” width=”640″ height=”728″ class=”center_text” text=”2015 Progressive Results at 5% Risk“][wp_lightbox_anchor_text_display_external_page link=”https://www.forexistentialist.com/wp-content/uploads/charts/backtests/ROBOS_2013-2014.htm” width=”640″ height=”728″ class=”center_text” text=”Jan 2013 – Dec 2014 Results at 2% Risk (2% TP)“]
Yes, it’s true! Many people who enjoyed successful careers in previous occupations, have also gone on to become highly successful financial traders. Good luck to them. They’ve been able to translate their success to another, totally unrelated, field. Unfortunately though, these gifted souls represent a pretty small minority. The hard reality of the matter is that most people, regardless of charisma, intellect or track record, are unable to replicate their previous winning ways in an arena so driven by emotions as the financial market. The very traits that saw them become stars in earlier careers aren’t necessarily conducive, or even relevant, to trading success. Qualities that are usually perceived as being strengths in most pursuits, often become incapacitating vulnerabilities when they’re applied to trading.
In this post I want to address one or two of the anomalies that exist between personality and vocational success, and warn against instinctively assuming that methods, which may have worked in a previous career, will seamlessly and effectively transfer to that of trading for a living…
Successful traders are essentially creative people. They take personal risks, think independently, and focus intensely on trading problems in order to develop innovative solutions. Creativity requires independent thought, non-conformity, and, to a certain degree, social isolation. In most other occupations however, these traits are undesirable. Human beings are social animals. In most occupations, we are obliged to work in co-operative teams. In fact, as humans, we usually prefer to work in the company of others. In these closed environments however, the interests of stability and harmony are paramount, and it’s important to the group that each individual makes a concerted effort to get along with work colleagues. We must be sensitive to each person’s idiosyncrasies, and sometimes yield to their needs, often at the expense of our own. In a business environment for example, it’s essential we understand our role within the organisation in order to climb the corporate ladder. We must be able to accurately view the company goals and direction from the perspective of our superiors, regardless of whether or not we fully agree with them. Conformity, and a willingness to work as a ‘team player’, are, more often than not, rewarded over independent thought. Straying too far from the corporate line is discouraged because it has the potential to sow seeds of disunity. This concept can be equally applied to professional sporting teams. Individual brilliance, whilst acknowledged and applauded, cannot, and must not, take precedence over team strategy as a whole.
Conformity, and sociability may be key components of a successful corporate career, but when it comes to trading, conformity is a limitation, not an asset. Professional traders constantly ask questions of the markets, and look only to themselves for answers. They don’t rely on the advice and opinions of others, and are continuously developing or adapting trading strategies in order to stay ahead of the crowd, not to follow them. Unless you’ve been fortunate enough to work in an unconventional career, or one that encouraged thinking ‘outside the square’, it’s very likely you haven’t had an opportunity to fully develop the level of creativity and independent thought necessary to give you a better-than-even-money chance of making a successful transition to a trading career.
But don’t despair. You don’t have to be a genius, or even well-educated, to develop independent thought. In fact, if you consider your childhood, before you were trained to think conventionally, I’m confident you’ll remember times when you made creative, and sometimes outlandish, decisions that were influenced by no one other than yourself, and the conditions in which you found yourself at that particular moment in time. Some of these decisions may have been silly and unrealistic, and resulted in failure at the time, but if you cast your mind back, I’m sure you’ll remember many other times that your decision-making worked out well.
There are many personality traits that can have an impact a professional trader’s earning capacity, and to be able to reap our full potential, we must be willing and able to conduct honest self-analysis. In future articles I’ll explore some of these other important traits in depth, but for me, the ability to think for oneself is king of the pile. Here are a few methods you can apply to help train your mind to think independently…
Accept that risk is a part of life: Making decisions, and then adjusting them to maximise benefits while minimising negative outcomes is a natural part of life. We do it all the time! Whenever we visit foreign cultures, make expensive lifestyle choices, raise children, or form new relationships, we’re stepping out of our comfort zone and taking a risk. Usually, as a way of mitigating risk, we try to think these things through before diving headlong into unknown waters, but it remains a fact that the risk is ever present. You may seek out the experiences of others before making your decision, but ultimately, the decision, and the outcome, are your’s, and your’s alone.
Approach problems logically: Our minds are trained to conform. We are social animals and find it a little too easy join the herd. Logic is an asset that most people possess but very few have the courage to use. One way to facilitate independent thought is to avoid the temptation to follow others – unless of course, it’s the logical thing to do.
Accept failure: Nothing ventured nothing gained. Trial and error is a necessary part of research and development, and it’s unrealistic to believe we can waltz through life without stumbling at times. In fact, we are unlikely to achieve real success without first experiencing failure, and often repeated failure. We should actually welcome failure as an opportunity to learn, and although the cost of failure may seem a very high price to pay at the time, it’s a price that will provide an enormous dividend in the end. Remember, perfection is not elusive – it’s impossible.
Disconnect from traditional learning resources: Before connecting to the internet, attending a lecture, or reading an article on a particular topic, try to analyse the subject matter for yourself, and attempt to reach an opinion based on your own perceptions. By all means compare your conclusions with other associated material and research, but before you do so, try to answer the questions posed using your own independent and uninfluenced thought processes.
Disassociate yourself from the subject: Standing back and looking at the ‘big picture’ can often give you a greater understanding of the problem; one that includes your unique perspective. Observing from a distance, rather than being caught up in the chaos and confusion, allows you freedom to see issues from many other viewpoints, which in turn, opens up extra space and time for you to reach your own conclusions.
There’s nothing wrong with being a skeptic: Cynicism is definitely a character flaw – it can make us negative and distrusting (even of ourselves), however, it is possible to develop an instinctive skepticism of concepts that may have been traditionally accepted for decades or even centuries, but which aren’t backed up with logical evidence. Scholars once thought that the Sun revolved around the Earth, but challenges to that traditional view by independent thinkers eventually led to our present understanding of the universe. Instead of simply assuming that so-called “truths” are a reality, we should withhold our judgement until we have confirmation that there is solid evidence to support the logic.
If you don’t enjoy your own company, being able to take time out for quiet contemplation, or you find it lonely, boring or stressful having to make decisions, on your own and independent of others, then you will find it difficult to become a successful trader. Ultimately it’s up to you to decide the reasons why you’re learning to trade. Is it for the social interaction, or to fulfil a career/lifestyle ambition? Oh wait! A decision… Isn’t that what we’ve just been talking about?
Check out last week’s trades below…