Remember that you are unique� just like everyone else.
WARNING! Rant/Sermon Alert!!! (You can skip this paragraph if you want�)
We all must act within certain standards in order to achieve success in life and as investors. We conduct our activities within a structure of rules, social guidelines, and behavioral expectations. We go to school, get a job, earn a paycheck, and dutifully invest a portion in the company 401k, an IRA, and a couple really good mutual funds offered by the broker down at Big Giant Global Financial Conglomerate Company, LLC ( a subsidiary of BGGFCC International, LP�you get the picture.) We buy a house, get a dog, get a spouse, squeeze out a couple kids, and take a few vacations�not necessarily in that order. Pretty soon the kids are out of school, the dog has long since expired, and we�re ready to retire to watching countless hours of high quality cable programming. We are satisfied in knowing that our kids will follow a similar path to success. These are the social norms. We conform. We comply with the �rules of the game�, so to speak. Accomplish these things and everyone will think you�re smart. Plus they�ll all say nice things about you at your funeral. You can probably arrange to be interred next to your dog�or your spouse, if you prefer. Let me suggest strongly that there is not one single thing wrong with living a �normal� life or following a traditional path. It�s far easier to navigate a well marked channel than to venture into uncharted waters. End of rant.
Whew! I feel much better now. Can I have an �Amen�?
The following is my spin on Shadow�s topic:
Conformity: acting according to certain accepted standards; also the state of meeting the requirements; taking action in accordance with customs, rules, prevailing opinion.
If you are exploring trading as a profession, then you�re already looking to break the mold and exceed the expected norms. (See rant above.) You want to be different. You want your trading income to significantly improve your life. You want to make better decisions without hesitation. Hmmm. You�re a nonconformist!
There�s always a panoramic view and a microscopic view. For starters, we know that we all must act within certain standards in order to achieve success as independent traders. We conduct our activities within the structure of laws, regulatory guidelines, and mechanical processes involved in trading. We comply with the �rules of the game�, so to speak. We also know that trends and reversals would not occur without the herd acting on its emotions of fear and greed. These rules and tenants can not be broken. What then can we do separate our trading performances from the crowd? Maybe we can take a few cues from some really smart guys.
A really smart guy named W. Edwards Deming said something like, �If we continue to do what we�ve always done, then we�ll continue to get what we�ve always gotten.� (Sorry if I trampled on this. I didn�t find the verbatim quote.) Mr. Deming pioneered the theory behind minimization of variance in industrial production. We broadly call this Quality Control. He noted that QC procedures can only succeed if upper management - the decision makers � understand and fully support the implementation of QC procedures. Deming�s ideas were overlooked by US auto makers back in the 1950�s. The Japanese car companies saw the value and implemented the ideas in their processes. What kind of cars are in your driveway and on the streets in your town? Right. Exactly.
So? What�s that got to do with the price of Rinmimbi in China? Well, for prospective traders it could mean an awful lot. On the personal level, [U]you[/U] are your own upper management. Put first things first. Step away from the trading environment and evaluate where you are [U]in life[/U]. Review your personal �constitution� and beliefs. We simply can not act outside of our core beliefs. If your personal life is in disarray, then your trading will be in disarray. If you exhibit self-destructive behaviors in your trading, then you will keep blowing out your account. Trading is a thinking process. It is not just prices, indicators, and button pushing. Without exploring your core belief system, you can�t improve your �processes� or increase the quality of your �product�, which is decision making. (This is a huge problem for traders � and a completely different topic. Maybe next week�)
Another really smart man named Howard Raffia, who studies the decision making processes we are all innately coded with has demonstrated something called the �Status Quo Trap.� That is, we instinctively choose to stay with what is familiar and we tend to look for decisions that involve little change. More choices = more effort. The more possible choices there are, the more likely that we will stay with the status quo. We also don�t like to take choices that prove us wrong. (Hmmm� is that why we don�t cut our losses quickly? Ouch! You stepped on my ego! :eek: )
We all read the same research. We look at the same charts. We trade through the same brokers. Every system can be boiled down to just a few basic things. We look for direction, price extremes, and areas of fair value. We use them to identify predictable patterns. It can be argued that the fact that we all employ the same tools is the only thing makes them useful. There is no secret �mold breaking� answer hidden within a trading system. � No matter how much you paid for it.
Do you really want to be different? Do you really want to set yourself apart from the crowd? Learn to make better decisions. You may discover that you don�t like trading. You may find it too difficult or even boring. You may never make money. You may find that your core values include beliefs like �the love of money is the root of all evil.� Regardless of the balance of your trading account at the end of the day, you will exceed the norm if you choose to apply yourself to the rigorous task of becoming a better trader - and a more evolved person - through self-evaluation and better thinking. Nonconformist!