Learning to trade is not very different from learning any other discipline. It takes a lot of efforts and finding the right teachers. At some level of experience, the best teacher for you will be you, but before such level is reached having someone to show you the direction of least resistance is priceless.
For example, in his early years, one of the most notorious composers ever – Mozart, imitated and mimicked the work of others. From their lessons, later in his life, he gradually builds his own unique style. This is a common path to success in music. Common path to success in trading.
In music first you learn the notes. Then you try to replay other guys’ compositions until one day you start to compose in your own unique style. In trading, first you learn the basics of supply and demand, some common market anomalies and basic market psychology. Then you read about other, already successful, people’s methods and try to mimic them until one day you become experienced enough to create your own style of trading that satisfy you financial and personal goals best. These are three different levels of expertese in each field and they should be mastered in the mentioned sequence.
Learning to trade is not very different from learning any other discipline. It takes a lot of efforts and finding the right teachers. At some level of experience, the best teacher for you will be you, but before such level is reached having someone to show you the direction of least resistance is priceless.
For example, in his early years, one of the most notorious composers ever – Mozart, imitated and mimicked the work of others. From their lessons, later in his life, he gradually builds his own unique style. This is a common path to success in music. Common path to success in trading.
In music first you learn the notes. Then you try to replay other guys’ compositions until one day you start to compose in your own unique style. In trading, first you learn the basics of supply and demand, some common market anomalies and basic market psychology. Then you read about other, already successful, people’s methods and try to mimic them until one day you become experienced enough to create your own style of trading that satisfy you financial and personal goals best. These are three different levels of expertese in each field and they should be mastered in the mentioned sequence.
1. Acknowledge Your Weaknesses – Whether cookies are the downfall to your diet, or you can’t resist checking your social media accounts every two minutes, acknowledge your pitfalls. Too often people either try to pretend their weaknesses don’t exist or they try to minimize the negative impact their bad habits have on their lives. For example, many smokers think, “I could quit if I wanted to,” because they don’t want to admit they’re hooked.
2. Establish a Clear Plan – No one wakes up one day suddenly blessed with self-discipline. Instead, you need a strategy. Whether you want to increase good habits like exercising more often, or you want to eliminate bad habits like watching too much TV, develop a plan that outlines the action steps you’re going to take to reach your goals.
3. Remove the Temptations When Necessary – Although we’d all like to believe we have enough willpower to resist even the most alluring enticement, it only takes one moment of weakness to convince ourselves to cave to temptation. Making it difficult to access those temptations can be pivotal to increasing self-discipline. If your weakness is Facebook, turn off the internet while you’re working. If you can’t resist overspending when you go to the mall, leave the credit card at home and only take a small amount of cash.
4. Practice Tolerating Emotional Discomfort – It’s normal to want to avoid pain and discomfort, but trying to eliminate all discomfort will only reinforce to yourself that you can’t handle distress. We can usually stand a lot more discomfort than we think we can. Practice allowing yourself to experience uncomfortable emotions like boredom, frustration, sadness, or loneliness and increase your tolerance to the negative emotions that you may experience as you increase your self-discipline. (more…)
1 Accept the fact that some days you’re the pigeon, and some days you’re the statue!
2 Always keep your words soft and sweet, just in case you have to eat them.
3 Always read stuff that will make you look good if you die in the middle of it.
4 Drive carefully… It’s not only cars that can be recalled by their Maker.
5 If you can’t be kind, at least have the decency to be vague.
6 If you lend someone $20 and never see that person again, it was probably worth it.
7 It may be that your sole purpose in life is simply to serve as a warning to others.
8 Never buy a car you can’t push.
9 Never put both feet in your mouth at the same time, because then you won’t have a leg to stand on.
10 Since it’s the early worm that gets eaten by the bird, sleep late.
11 The second mouse gets the cheese.
12 When everything’s coming your way, you’re in the wrong lane.
13 Birthdays are good for you. The more you have, the longer you live.
14 You may be only one person in the world, but you may also be the world to one person.
15 Some mistakes are too much fun to make only once.
16 We could learn a lot from crayons. Some are sharp, some are pretty and some are dull. Some have weird names and all are different colors, but they all have to live in the same box.
17 A truly happy person is one who can enjoy the scenery on a detour.
One of the best things I came across this past week was this terrific review by Morgan Housel where he shared insights from the book “Mistakes Were Made (But Bot By Me)” by Elliot Aronson and Carol Tavris. Several members have recommended this book to me so I was very interested to read his review.
According to Mr. Housel, this are the six most important things all of us should learn from this book, many of which are very important to investors and traders alike:
1. Everyone wants to be right and hates admitting the possibility of being wrong.As fallible human beings, all of us share the impulse to justify ourselves and avoid taking responsibility for any actions that turn
out to be harmful, immoral, or stupid. Most of us will never be in a position to make decisions affecting the lives and deaths of millions of people, but whether the consequences of our mistakes are trivial or tragic, on a small scale or a national canvas, most of us find it difficult, if not impossible, to say, “I was wrong; I made a terrible mistake.”
The higher the stakes — emotional, financial, moral — the greater the difficulty. It goes further than that: Most people, when directly confronted by evidence that they are wrong, do not change their point of view or course of action but justify it even more tenaciously. Even irrefutable evidence is rarely enough to pierce the mental armor of self-justification.
2. You brain is designed to shut out conflicting information.In a study of people who were being monitored by magnetic resonance imaging (MRI) while they were trying to process dissonant or consonant information about George Bush or John Kerry, Drew Westen and his colleagues found that the reasoning areas of the brain virtually shut down when participants were confronted with dissonant information, and the emotion circuits of
the brain lit up happily when consonance was restored. These mechanisms provide a neurological basis for the observation that once our minds are made up, it is hard to change them. (more…)
