Support and Guidance for Tribal Minds - Part 2

Discussion in 'The 'On Professionalism' Thread Series' started by jack, Aug 25, 2013.

  1. jack

    jack Administrator Staff Member

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    This is the seventh installment of the On Professionalism thread series.

    The previous installment thread can be found here:
    Support and Guidance for Tribal Minds - Part 1

    The index and first installment can be found here:
    On Professionalism




    In the previous installment of this thread series, I highlighted the downside of tribal-communal thinking. Now for the upside:

    "What's that? There's an upside to tribal-communal thinking? I almost forgot after all the negatives..."

    YES! There is!

    You're going to need support. Trading, if you're doing it right, can be lonely. Most of your close friends or people you grew up with aren't going to be traders, so it's hard for them to relate with you when you're talking about your work while at social gatherings.

    It's still healthy to feel the desire of being included and understood after all, so we should find an outlet for this when it comes to trading.

    Start using places like this very forum as a constructive and positive place to share ideas and talk about trading in general. Perhaps keep a journal online so others can relate with your experiences too and comment on them. Connect with people who are like-minded online, since the vastness of the internet can bridge any geographical distance between you and like minded individuals. And, if you live in a city large enough, you might even find local traders meetup groups you can join.

    (And please, always conduct yourself in a constructive and positive fashion when you post online or partake in any anonymous means of communication.. if you can't keep cool talking to other traders how will you ever expect to keep cool during a bad trade? It all comes back to discipline, and keeping control over your emotions is something you need to exercise at all times if you ever want to count on that skill when you really need it during a stressful trade.)

    ** In the previous installment, I marked two asterisks (**) when I said there was one exception to the family/friends rule. One of the single most important people you should converse with about your trading is your spouse or partner. They might not have much of an understanding but they, of all people, need to support you emotionally and they can't begin to do this if they don't understand exactly what you do.

    This might not be easy, as I've dated a few people in the past that only see flashing numbers and the chance of risk, but sit down with your spouse and show them what you're so passionate about when it comes to the markets. They don't have to become a trader, that's not what I'm suggesting, but give them the very basic foundation of what's going on and how you view the world through a trader's eyes so they can feel like they understand you and what drives you in this business.

    You need to be able to communicate your frustrations, and your joys, when it comes to trading. As much as your spouse will be happy for you when you do well, if they have no context and are unable to relate they won't understand exactly what that success means for you. Or, if you're having a bad week, they won't truly grasp why you're not in a great mood (beyond any losses) and may even start to resent you for being a dark cloud around them.

    Communication here is key here!

    After all, your spouse is your better half, so keep them included...since down the line, when you need to convince them that it is OK you're quitting your day job to trade full time, or when you want to switch careers and join a prop firm, or when you need to make any major financial decision as it relates to trading professionally, their understanding thanks to proper prior communication will pay off.

    Seek out mentors.

    As we want to avoid letting outside influences affect our trades, we do want to take in some types of outside influences that aid our development as a trader.

    Or, put simply: You want to look for people who teach you "how to fish" (methods, strategies and mindsets,) not the ones who feed you free fish (trade calls.)

    This is a "give a man a fish vs. teach a man to fish" type cliche comparison. I know. But if you want to develop yourself as a trader you'll need to look for the following in a mentor:

    • A focus on consistency regardless of the strategy.
    • Ability to objectively look at any strategy, not just preach about their own method, since a professional career trader is adaptable to different strategies in different markets and understands that not everyone thinks the way they do.
    • Ability to tell you what's not working and what you need to stop.
    • Ability to talk about their own mistakes and their own trading record without buffing out the scratches... EVERY trader makes mistakes, it's how they survive their mistakes and learn from them that matters.
    • Ability to walk you through lifestyle exercises and theory exercises that will help build skills used in trading. Mental walk throughs, number games, probability theory, etc...

    I can't stress this enough: If the potential mentor only wants to teach a single rigid system, sell you on trade calls, and doesn't think anything else will work: Stay away from them. If they only want to feed you trade calls alone, RUN away. Don't let others influence you in this way. (I know I keep saying it, but the point is really important.)

    Taking on students.

    Don't stop there; you didn't make it this far without learning a thing or two. Find students, share what you know. I'm not saying that you need to hold yourself out as a mentor, but share what you do know to others in the industry even if that means just starting a simple thread online on a forum about it.

    I'm not saying you need to give away your edge, but a lot of professional traders horn in on their skills by teaching others. You really reinforce the lessons you've learned over the years if you reteach said lesson to other people. Our brains are wired to really solidify concepts in our own memory should we be expected to teach others.

    (If you're still new to trading, this part won't quite apply to you, it's for experienced traders trying to better their performance and focus their skills. You can still do it as a new trader, even a newbie, but please keep in mind the limits of your experience and know when to refer to other resources when faced with questions that are out of your reach.)

    Remind anyone learning from you that you won't give them trade calls, and you won't suggest trades. If they only want you to give them trade ideas then you're not really teaching them and they just want someone to make trade choices so they don't have to. Avoid these types of 'students.' Or at least explain to them that they need to think independently (maybe even refer them to this thread series, *hint hint*)

    You'll get flack for it, some might even suggest you won't give trade calls because you aren't profitable or don't know how to trade, but ignore them and remember where they are coming from (a place where they can't make their own decision or want someone else to trade for them.) You didn't sign up to make them rich through your own trade choices, the only person who's going to make them profitable is themselves, you're just in this to progress yourself as a trader, nothing more. If they can't deal with this, they are better off signing up to a signal service and blowing their retirement savings chasing penny stock.

    Tribal minds, once tamed and used properly, can be an asset. Recognize why you want to seek outside validation in your trading choices and why it will only hold you back. Work toward being a completely independent trader. Share this mentality with others. Your account balance will thank you in 10 years.



    The next installment in the On Professionalism thread series can be found here:

    Losers Average Losers, Averaging Down, and Griding it Out
     
  2. Adamant FX

    Adamant FX Member

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    Great publications so far, Jack!

    Cant believe I've overlooked this part of the forum for so long. This articles are so brilliant and helpful, thanks a ton for taking the time, I really enjoy reading them.

    Now, back on topic: could you elaborate a bit more on the quoted point, not sure I completely grasp it.

    thanks in advance.
     
  3. jack

    jack Administrator Staff Member

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    The general take away is to take influence from people who are more interested in teaching you how to fish, instead of just giving you fish.

    Put another way, a mentor should be someone who teaches you how to go out on your own, drop into any market, and come up with your own profitable strategies without their help.

    Just trading based off your "mentor's" signals isn't being mentored. Just blindly following your mentor's strategy without understanding it, isn't being mentored. Heck, even learning a few analysis methods alone isn't quite enough. You have to depart your mentor with the ability to think for yourself based on what you learned..

    I mention number games, probability theory, lifestyle exercises, etc.. because some people need it. Not everyone, but some do.

    Examples:

    Some still have trouble with motivation and discipline. This will likely be the downfall of their trading career. A trader worth following (a mentor) is going to identify this early on and either help the person fix it, or become very disinterested in helping the trader any further (as it's likely going to be a waste of time for everyone involved.)

    Some people still can't wrap their heads around probability or expectancy. Again, instead of fighting some misunderstanding (and people are stubborn if you just straight up attack their idea of what's what,) a good teacher should be able to walk through a few thought exercises or concepts that help the person grasp it better.

    An easy example would be people who are convinced that martingale (or just plain averaging down to always avoid losses) is the key to riches.. that if they have deep enough pockets, and keep doubling down, eventually the market is bound to move enough back in their favor to get out flat or for a little gain.

    I often try to dispel this believe with two separate bits:

    1) "Does it make sense that you'll have the lease exposure when you're the most right, and the most exposure when you're the most wrong?"

    2) I usually force them to sit down with an Excel sheet and work out a risk table--what the trade is worth to them at each layer of additional size, unrealized risk--as the trade moves against them. Sure there's plenty of websites with this tool available (or with an Excel file ready to download with the same table,) but there's a lot to be said for making someone write it themselves... as if the idea (and obvious risks) become more apparent if it was themselves discovering it as they go.

    Once they are done with the table, which usually looks pretty bleak in how quickly the risk increases as you average down or martingale, I then ask them to point out the max $ amount they are willing to lose (and thus, how many layers of orders they would be willing to put on before tossing in the towel since the loss is too painful.) Once they've indicated this number, I count back the layers and pip/point distance between them, and ask them to show me, on their desired pair, an extended period of time (months, years) where such a move never happens (they usually can't 99% of the time.)

    Any further arguments as to why such a move happened historically are usually based around 'news' or some event risk that they try to convince me they wouldn't be apart of or wouldn't trade. But I reinforce the concept and say that had the trade already been put on before such a move, they'd have no choice but to keep the betting program (martingaling) going til they hit that magical threshold where they give up. (If they have trouble with this, I do a quick, bar-by-bar, walk forward from before the event/move took place, and ask them how good the pair looks, while reminding them that hindsight is 20/20 and that they'd likely make a different choice when a watching the market as it ticks.)

    Then to top it off, I ask them to be honest with themselves about if they'd even be able to punch out when it got that bad.

    This usually cures martingalers.
     
  4. ICT4Profits

    ICT4Profits Member

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    Thanks for the elaboration on martingale, that was helpful in understanding the topic! :thumbsup:
     

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