The Sequence of Success
First learn about HOW markets work, then about WHAT works in markets.
I'll begin this entry with a quote. "All the world is a nail to him who owns only a hammer."
Yesterday I went into Wal-Mart to get lightbulbs. Nothing difficult, just a routine activity that I've been doing for as long as I can remember. If I need something I walk into a store, go to the section that shelves the item, pick it up, go pay for it and leave the store. I now have my product and can benefit from it. I have taken part in activities such as this one so much, in fact, that I have become accustomed to getting all of my material needs and most of my material wants met in the time it takes me to drive to a store, pick up an item, and pay for it. But until I began trading I never thought about how this lifestyle (consumerism) effected my mindset and general philosophy of life. Because nearly everything i've needed or wanted was at my fingertips I , and many other Americans, have developed behavior that inevitably leads to the embodiment of a certain attitude that dictates how we psychologically approach needs and wants from day to day, and this attitude left me completely unprepared for what it would take to learn to trade profitably. This attitude said that I can get whatever I currently want if I have the money to afford it.
Now, some things we know cannot be approached in this way. This way of simply buying things when we want them, like love, friendship, you know, things on a more personal level. In fact there have been numerous popular songs in the past 50 years or so that have been about the fact that "Money can't buy me love." As far as these things go we are pretty well versed and unless someone is socially handicapped, we will normally not see anyone believing that they can "buy love" or anything of the sort. But then we cross over into the area of education, learning, and experience, which seems to be sort of a hybrid between a simple object you can purchase with the extent of its value enveloped into it's physical apparatus, and something like love that you must put a great deal of effort into in order to reveal its full benefit.
Out of the two mindsets I've just outlined there are far more people approaching trading with the consumerism mindset than there are approaching it with the interrelational mindset, and why? Because the trading education industry has sent that message out to the trading education market. "Make money with this strategy, GUARANTEED!", " Learn the tricks of a market professional to boost your profits by 1000%!" "Learn how to make $2,000,000 with this one simply brilliant strategy!". Let's face it, the online trading landscape basically consists of an arabian desert full of small huts with snake oil salesmen inside. It's full of men who understand that other men become weak and vulnerable if you can just get them to feel the effects of greed. They will hand you their money in hopes of making much, much more. From a marketing perspective its the oldest trick in the book, yet somehow still survives with an ever increasing facade of sincerity and honesty. So because the trading education industry has made these claims naturally we are going to see a good deal of the type of people to believe things like this become the majority of the demographic that constitutes the online trading community.
The trading industry has commoditized trading education, and this initially draws out of the woodwork those who are looking to buy something and become good at trading because of it. You can't sell someone the investment of their own time and mental energy, so you must sell them something that replaces those things.
Why is it very important to NOT think like this if you want to become a successful trader?
To put it quite simply, because it takes much more than you can buy to become a consistently profitable trader. It takes an investment of your own time and mental energy. It is education, which requires not only the fee of the service, but the interaction, the attention, the absorption of not only raw information, but the craft and tact that compliments and legitimized that information. Accomplishing these things are possible, but you must realize that you cannot buy the work you need to put into this art if you want to get very good at it.
Most of the aforementioned snake oil salesmen focus on selling you one thing, what works in markets, but they rarely focus on the much less glamourous HOW markets work, which I know is the the single most important factor in learning to trade successfully. Here's an example of why this is so important.
The other day I was driving home from dinner with friends and I started doing something that I like to do as sort of a hobby when I'm driving on a two lane highway. I like to try to predict how the drivers in front of me will behave based on how their behavior has been in the past. For example if I noticed that earlier someone slowed down a bit in order to move from the right lane to the left when it wasn't immediately necessary for them to do this I gather this information to try and predict what they will do in the future. I also consider the nature of the layout of streets in whatever area I happen to be in. If there are two left turns ahead and one of them is a dead end I can only assume that the car that was making a clear effort to move into the left lane earlier would most likely be turning left on the street that is not a dead end. Another variable would be both the type and value of the vehicle in the socioeconomic context of the area. If I wish to engage in my hobby with the most accuracy I have to be proficient in two areas. Understanding the behavior of the drivers immediately around me by close observation and understanding the possible avenues these drivers could take as well as the economic characteristics of these avenues. So to put it simply I have to understand both the drivers and their surroundings if I want to accurately predict where they might be going in the future.
Understanding WHAT works in markets is like understanding what the drivers immediately around you are doing and how they are behaving, but you'll never be able to accurately tell what they are going to do in the future without understanding the structure of the area and layout of the streets in the area around you. You could watch the driver switch to the left lane when he didn't necessarily need to, but without understanding the nature of each upcoming left turn you are left much more to the mercy of chance regarding specifically which upcoming left turn he is more likely to take. You see, understanding the layout of streets is like understanding HOW markets work because it gives you the power to narrow the choices of where the market may go after you have observed how price is currently behaving.
In conclusion, it is very important to understand that HOW markets work is an extremely valuable part of learning to trade profitably, not just WHAT works in markets. This is why I've focused on how markets work in the
Pro Course, and as those who've taken it know, learning about how markets work makes knowing what works in markets mean much more.
"All the world is a nail to him who owns only a hammer."
Expand your ability to adapt.
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Simple and Powerful Trading Concepts - Episode 4.) The Sequence of Success
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