You’ve seen the advertisements in trading pubs that convey the impression that trading is an easy path to wealth. Indeed, trading looks simple (deceptively so). Everyone is a genius trading a cold chart.
It’s on the hard, right edge of a moving market where one encounters a very different cognitive dimension, which for most people is as disorienting as the Twilight Zone.
Obviously, if trading were truly easy, the wash-out rate for active self-directed traders would not be around 80%. Why so many flops?
I think it’s because most traders are male, and as it turns out, men (not women) not only under-estimate the difficulty of most challenges, they/we also over-estimate our own abilities. That’s a potent formula for self-deception.
The result is a declining equity curve and the stubborn conviction that one is nevertheless on the verge of greatness.
Market Wizards Do Exist
I don’t dispute that some people are bonafide trading wizards. I know several, but rarely can they impart their elusive magic to the neophyte. And if you ask them how they achieved Mastery, it turns out that most have graduated from the same school – the School of Hard Knocks.
The truth is that most aspiring traders won’t learn the game until they get hurt – learn the painful lessons – and then bounce back (wash, rinse, and repeat any number of times). Three near death experiences usually does the trick.
Does it have to be like this?
The Market Environment Is Not Normal
The essence of successful trading is getting comfortable taking financial risk in a time-compressed environment of great complexity and uncertainty. Complexity means there is a large amount of conflicting data. Time-compression means we don’t have the luxury of analyzing that data at our leisure. And uncertainty means we will often be wrong, and there’s no way to avoid that outcome.
This is not an environment a “normal” person typically encounters in his/her daily life, quite the contrary. We organize our world to eliminate as much complexity, uncertainty, and time-compression as possible. So, when you sit down at your trading desk in the morning, you are entering an especially unfamiliar and challenging world (The Twilight Zone?).
Achieve A Flow State
Research shows that thriving in this type of environment depends to some degree on one’s genetics and the parental messages one received in childhood and adolescence.
As well, the 10,000 hours of practice recommended by Malcolm Gladwell is a reasonable requirement (Keep in mind, if you love what you are doing, time flies.).
The only fast track to trading success is a “flow state,” which is achieved only when the challenge presented by the market matches our abilities, so that the adrenaline and the stress hormones subside. Flow is not frenetic, anxious or impulsive. It’s the acquired ability to dance gracefully and humbly with a giant.
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