How trading is different from other professions.


Highly qualified professionals and intellectual people, people who have had a very striking career in their own professions, with a series of successes, when they enter the arena of trading, they mostly undergo a severe amount of stress and frustration. And there is a psychological reason for that.

We have all been through that phase of life. We all went to school as kids. There, unknowingly we picked up the traits of comparison and benchmarking. These traits have got embedded in our minds in such a way, that without realising, we start the process of comparison automatically. 

As school kids, we were taught that if we study more, then we will get better marks. We started monitoring our progress by comparing our marks in the past with present. Also we compared our marks and grades with our peers. Those traits of comparison are embedded in our minds and it is extremely difficult for us traders to get a psychological control over those traits.

These traits, further got emboldened in our higher education. And got further strengthened in the rat race of our working life.

However, as traders, we need to rise to the fact that these comparisons are not the way forward, and that they will only hinder our progress and delay our arrival at the riches we are aiming for.

Let me explain why this is so with an example.

As a construction engineer, Mr A is highly qualified and experienced. He knows, that unless he digs the land perfectly, he cannot lay the perfect foundation. So he ensures, that his digging is perfect. Then he knows, unless his foundation is finished, he cannot start the further construction of the ground floor. So he sees to it, that the foundation work is absolutely perfect and is on schedule. Then he knows, unless he finishes the construction of columns and beams, he will not be able to start the brick work. So he focuses on the quality and schedule of the columns and beams. Then the brick work. Then the plaster. Then the paint. and so on.

As traders, we should notice the difference here.

Any task that Mr A is handling, its outcome is detrimental for the quality and schedule of his next task. So he has to ensure perfection in each of his tasks so as to get the overall task done perfectly.

Mr A also knows, that the amount of input he personally gives on each of these tasks, will enhance the probability of the outcome of these tasks to more acceptable levels.



When it comes to trading, things get diametrically opposite to this.

Your next trade does not depend on the outcome of your current trade, as long as you remain sufficiently financed. Also you never know beforehand, whether your current trade is going to succeed or fail. There is absolutely no method to ensure that, else no one would have taken trades that are bound to fail and the markets would not have moved an inch, and there would have been no traders left to trade anymore. 

Read the above paragraph twice or thrice until it actually sinks in. Then proceed.

Since there is no way to know beforehand whether the current trade is going to succeed or fail, and by how much, there is no point in getting stuck with the outcome of the current trade. 

You cannot do anything to alter the outcome as well. It is other players in the market, who decide what will be the price of the next tick and the tick after that and so on. You have absolutely no control over it.

What your method of trading can ensure

1) When your trade succeeds, you gain more than what you lose when your trade fails.

2) You will have more winners than losers over a longer number of trades.

The following picture is the chartical representation of a trader's career graph. You need to survive and get over the stage 1 and stage 2 before you can see the exponential rise in your wealth. 



 The mantra to a successful career in trading is

Get Rich Slowly, Surely !

Happy Trading !!!

Nilesh Deshpande

3 comments:

  1. Nilesh,
    Thanks for your best article.Being a part of construction industry,the example you have given practically suits.Thanks.

    ReplyDelete