Ever wonder how there can be such a great progress in technology, health, etc, yet there are still people struggling in the world? ¬†Still so many people in poverty even in developed countries. ¬†Still so many people overweight. ¬†All these computers, mathematical algorithms, iPads, smartphones, free charts, etc, but yet people still struggle to become traders?
There are two primary reasons for this:
1. ¬†Firstly, while there can be better technology, it still doesn’t replace individual choice and desire. ¬†There can be better technology that can help make the journey a bit easier, however it still requires self discipline to do so.
A quote by Walter Russell sums it up:
Mediocrity is self inflicted. ¬†Genius is self-bestowed.
If you are trying to become a successful trader today – it is a lot easier today from technological standpoint compared to say back in the 1970’s. ¬†Back in 1970, you didn’t have instant free charts and quotes, instant fills on trades through the internet. ¬†You may have had to wait several minutes or hours to get back a fill on a trade, and you had to place the trades over the phone if you weren’t on the trading floor.
Today, the fills are much faster, charts and quotes are relatively free, and you get access to all this information flow that people back in the days could only dream of.
But the principles of speculation never change. ¬†Whether you are trading back in 1970 or in 2013, you still need to understand the right trading mindset, beliefs and strategies. ¬†Technology just amplifies what you already are. ¬†If you are a great trader already, then technology acts sort of like leverage and speeds up whatever you have become and whatever you are. ¬†If you are a great trader, then the instant fills, access to many different markets, mobile trading, etc, all help you to increase your account faster. ¬†If you are a unskilled trader, then great technology will just cause you to lose your money faster.
That is why one of the secrets of success is to have self discipline. ¬†It allows people who don’t have talent, to perform and do so much more than people who do have talent. ¬†For there are a lot of people who could be great traders, but they don’t like to do the work. ¬†While the people who don’t have innate talent, can accomplish so much, if they do the work – the intelligent work.
2. ¬†Also, with the increase in technology and information flow, it can lead to either being distracted, or a feeling of being overwhelmed with so many choice. ¬†A few decades ago, lets say people would waste time on the Television. ¬†Well now, they can get distracted from their career goals and jobs not just by the TV, but also from YouTube, Facebook, iPads, etc.
It takes self discipline and constantly reminding yourself of what your goals are and what really matters. ¬†Then you can pick and choose the technology that can help speed up the process towards your goals.
Also, with the advent of free charting, Metatrader, etc, there has been an explosion technical analysis and indicators. ¬†A few decades ago, it was rare to see so many people use moving averages or stochastics, etc. ¬†Either because they weren’t available, or it wasn’t so easy to computer such indicators from the data. ¬†Well now, moving averages and MACD are all the rage among the aspiring trader community. ¬†Plastered on every trading website and charting package are these indicators you just slap on with a click of a button.
Most people trying to become a trader are just so overwhelmed with choice. ¬†They have to try to figure out and choose from so many available options – whether that is a MACD, stochastics, RSI, elliot waves, head and shoulders patterns, engulfing patterns, and ten thousand other options and variations. ¬†They just feel so overwhelmed and confused since they do have the needed knowledge and principles to be able to quickly sort the important from the irrelevant information.
There was a much more “real way” to trade that existing a few decades ago, and it still exists today. ¬†It it somewhat of a lost art form among the beginning traders on the internet because not too many people can explain it and the ones that can, have to go up against the onslaught of the technical indicators.
Concepts such as liquidity, volatility, expectations, and global macro never die. ¬†They can never die because they have been the foundation of the markets and still are. ¬†Most of the money that moves in the financial markets is caused by such key trading principles. ¬†The big money that causes the volatility is much closer to the market truth, even if they get it sometimes wrong. ¬†It is most of the beginning traders that get it wrong and get trapped in the tech indicator or chart pattern/price pattern rat race.
Once I figured out that the trading heroes and idols that myself and my friends were following on the trading forums, etc were the wrong path, I knew I had to change. ¬†To change some of my behaviors, because as you know how the saying goes: ¬†“The definition of insanity is doing the same thing over and over again and expecting different results.”
I am always fascinated by people’s life stories that they have. ¬†I try to be a sponge and suck up information from so many different sources. ¬†Of course, I prefer information from sources that I already know I can get good information from. ¬†But sometimes I like to mix it up and add some spontaneity. ¬†To get in conversation with other people and figure out what are their goals, dreams, aspirations and beliefs about life. ¬†Even Mark Zuckerberg had a resolution to meet at least one new person outside of Facebook every day.
You can come across some very interesting people in life. ¬†People can be some of the greatest joys as well as pains in life.
I will tell you the story of a man over the age of 60 that had, from my perspective, a few wacky beliefs about life and the markets. ¬†It started off extraordinarily well. ¬†Plenty of amazing stories about his life, his time in the military, etc. ¬†I was engrossed and didn’t want to leave. ¬†Then he started spouting off his views on the financial markets. ¬†And he fell into the trap that far too many people in society fall into. ¬†Talking about how there are so many dishonest people in the financial sector, and how they steal your money, etc. ¬†He talked in glowing terms about some people that scammed millions from Wall Street and fled the country. ¬†He talked about while they were on the run, they still had millions left and could enjoy life. ¬†I tried to convince him that it wasn’t much of a life living on the run. ¬†I was searching for the fastest way to extricate myself from such a situation.
Then came the shocker.
A few minutes later he told me about one of his sons that was in prison. ¬†At first I felt so much compassion for the man having to endure his son in prison. ¬†And I still do feel compassion. ¬†But I can’t help think about how many other wacky beliefs about life this man had, and consciously or subconsciously, instilled in his child these false beliefs about life while he was raising him. ¬†Which in the end contributed and heightened his son’s risk of going to prison.
Now you may ask, what does this have to do with trading? ¬†It has everything to do with trading.
A lot of things about life are about your beliefs, how you perceive them, the thoughts and stories going on in your head, the false programming that you had growing up and whether you were able to overcome them and build a better life.
There are so many people who could be great traders, but they feel that the markets are a giant scam, and thus don’t put forth the needed effort.
Other people could be great traders, but they carry the belief that it doesn’t contribute anything positive to society.
Other people would make more money trading, but they believe that making any more would make them rich and thus “bad” in their view.
The list can go on and on.
As a final example, take the¬†Market Wizards book, with Dr. Van Tharp talking about a trader who had his trading profits severely restrained:
I worked with a floor trader whose father was fairly successful. ¬†His father was not a good model for him, however, in that he was an alcoholic. ¬†As a result, he developed a part to protect himself from being like his father. ¬†He could make about $75,000 per year trading, but if he made any more than that, this part kicked in to make sure that he would not become too successful. ¬†He was the one who made $650,000 in about two months after we had completed the parts negotiation.
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