Joseph Campbell’s Hero’s  Quest contains a number of stages. The first is the ‘Calling’ which in turn has 5 stages:

  1. The current state
  2. The call to adventure
  3. Identifying our greatest fear
  4. Encouragement by a mentor
  5. A Full Commitment to the quest.

I’ve add a sixth, ‘prepared for the quest’: ‘being committed’ and ‘being prepared’ are two different things.

In my case, the first five elements were all present. I wanted to switch from being a solicitor; I was interested in trading; I had little fear of the switch; and I was fully committed to making it work. However, I was ill-prepared - even though I spent quite a time reading about ‘how to become successful’.

You have to remember that over 30 years ago, the success industry was not as well developed as it is today; and the route to success in the markets was even less so. Most damaging of all was the fact that my prior experience had led me to rely on the written word to provide the foundation for competence:

  • In Sydney, in my final years of secondary school, I changed my HK ways and studied well enough to attain a Commonwealth Scholarship and entry into any university of my choice.
  • I chose Sydney Uni’s Law Faculty and graduated without failing a year.

In both cases, I succeeded because I put in the time and was able to reproduce the ‘words’. This experience continued in the 10 years I ran a profitable legal firm.

But there was a problem with this approach when I started trading. The problem was the literature bore little resemblance to the reality of making money - had little to do with what was really needed for success. So, when I started trading, my beliefs were:

  1. Being right was important.
  2. Making huge piles of money in a brief time was the norm.

What passed for education was along the lines of Gann’s Interview by Richard Wyckoff in 1909. I have attached the interview.

You’ll note that in Oct 1909, Gann made 286 trades, for 264 winners, and succeeded in doubling his capital 10 times. This means that had he started with $100.00, at the end of October, he would have amassed a staggering $102,400.00!

I read all the books that Gann wrote and believed that if he could do it, then so could I - all I had to do was apply Gann’s ideas. (BTW,  Gann made little sense to me then; the same can be said for today. Gann and I just don’t click).  Most of the educational material preached the same message; and so, my (erroneous) fundamental beliefs, ‘being right’ and ‘make a pile of dollars in a brief time’, were reinforced.

How would the Ray of today counsel the Ray of ‘yesteryear’ to prepare him for his journey?

As a preamble - there are a few very talented individuals who will achieve dizzy heights - heights that few mortals can emulate. Your job is not to follow in their footsteps - the reality is you won’t. Instead,  find a way that will attain your deepest desires. Know there is no shortcut. You will need to put in the same time, effort and money as you did in pursuit of a law career. But, in the end , you will find the rewards ever so much more satisfying.

I tell ‘Young-Ray’ 10 points to remember:

  1. Identify your dominant values
  2. Incorporate them into a Vision and commit that Vision to paper
  3. Translate that Vision into a long-term, intermediate term and short-term goals. The Visions are unalterable, the goals are flexible. Indeed, they will constantly change as you learn new ways to lead to your Vision. Know that in the implementation of your goals, some actions will lead to and others will lead away from your Vision. Both are learning experiences. Use the learning experience to refine your goals so they bring you ever nearer to your Vision.
  4. Have both process as well as outcome goals. Since the outcome goals will not be within your control, use them as a measuring rod rather than an immovable objective.
  5. Success will take time. This learning curve will be shortened if you find a reliable mentor.
  6. Forget about being right. Instead, have a written method, a set of rules, that indicate when the probabilities favour you (your entry) and when they don’t (your exit if in a position; stand aside if not in a position). You don’t need a plan that will give you the greatest return at the start of your journey. Instead in the beginning…
  7. Focus on a set of tools that will lead to consistent execution of your written strategy and written risk management plan. These are the key fundamentals.
  8. Write a risk management plan to cover position sizing, risk per trade, when to increase size and portfolio risk.
  9. Keep a written journal and review it regularly. Use the journal to become aware of patterns of behaviour that lead to success and those that lead to failure.
  10. Success, in the beginning at least, means you have followed your plans. Failure means you have breached your rules. If at the end of 30 trades, you have succeeded but lost money, revise your trading strategy. Use the experience to improve your trading rules.
  11. You will meet along the way promises of easy riches from little capital and no effort. Run from these - they offer naught but the taste of ashes of lost fortunes.

If ‘Young-Ray’ had started with these words of wisdom and if he  had heeded them, the quest would not have been as hazardous and the experiences less soul-destroying.

More tomorrow.

tickler-interview-w-d-gann-1909.pdf

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