BarroMetrics Views: Dr. Janice Dorn, “Why Traders Fail”
Today I was going to comment that part of the success equation on which newbies focus: the trading methodology. Specifically I wanted to ask the question: what constitutes a robust plan?
But then Dr Janice Dorn’s July1 newsletter hit my mailbox. It’s so good that I want to share it with you not only because it well-written, but also because it fits neatly into our current theme. And while I may not agree with Janice’s view of the purpose of the market, it is an angle worth considering.
Thanks Janice, for permitting to replicate it. By the way guys and gals, Janice has a great, free newsletter at her site: www.thetradingdoctor.com
“Most traders come to the markets because they see a way to break from the 9-5 routine. They want to make their own decisions, say” bye bye” to working for the boss man (or woman), set their own time schedules and routines. There is a magnetic attraction to the idea that you can make money, sitting in your pajamas, typing on a keyboard and doing what is called “playing” the markets. Playing at home in pyjamas…sounds like a teenage slumber party with lots of fun, doesn’t it?
But wait—it can’t be that easy, can it? Of course not. If it was that simple and a sure thing, everyone would not only be doing it, but would be happy, joyous and free. Clearly that is not the case. So why?
I believe that everyone can attain personal and financial success using his or her own unique ability. Many of you have proven this in life outside the markets. You are successful in real estate, accounting, medicine, engineering, the law, sales, etc. So why are you struggling with the markets and why is this pyjama game not working so well?
The answer is really quite simple, and—just like so many secrets—is hidden in plain view. The type of thinking that made you successful in life outside the markets is the mirror image of that in the markets. In “regular” jobs, in the world of real life—there are rules. These rules are set down by other people. Other people make rules and you follow them. If you do not follow the rules, you risk losing your job or your license. Think of medicine: a doctor must abide by many rules set forth by state medical boards. If they do not, they are warned, disciplined and may have their licenses revoked. The rules are out there and doctors follow them—or don’t (at their own peril and that of their patients.)
Now we come to the markets. Yes - there are rules of trading set by regulators, exchanges and the brokerages, but they really are minimal in the overall scheme of things. Unless, of course, one is a criminal or Madoff-variety sociopath and then things can get tricky and nasty fairly quickly. So - who makes the rules for your trading? You do.
Who executes trades based on the rules you make for your trading? You do.
Who tells you if you are right or wrong about the rules you make? Well, the markets tell you but you have to listen and take action. So, once again—it’s about you.
In this type of environment, many people flounder. They are not used to making their own rules, executing them and taking personal responsibility when their rules are shown to be an illusion by the markets.
Please listen closely to the webinar posted on the Trading Wisdom Blog on June 21. It talks about illusions and “convenient lies” in trading. It speaks to the self-deception and what is called “confirmation” bias. This means that you stay stuck with certain ideas and look anywhere for something that confirms this to you. Nothing is correct except what the markets are saying. It doesn’t matter how flowery or convincing the prose, the charts, or the analysis. It’s all an illusion unless the markets confirm. All of it.
In the end, your freedom in the markets is solely a property of who you are, what you believe, what you believe that is not true and what you do about it. In most cases, it is the ability to think in probabilities in a counter-intuitive manner that separates the losers from the winners. In other words, the same type of thinking that brought you so much success in the world outside the markets will not bring you success in the markets. Think about this for a second, please. Let it filter in and then try to get your brain around this concept. It is critical to understand this at the deepest level in order for you to move forward as a trader.
This is a new game, possibly unlike any other you have played in your life. Realizing and truly “getting” this can be a very lonely and alien experience for many people. Additionally sharks circling quietly in the murky waters are waiting for those who do not understand the nature of the game they are playing. Remember, the purpose of the markets is to remove as much money as possible from as many people as possible. It’s not a “play nicey nicey, throw feather pillows and eat popcorn” pyjama party. It’s a brutal and vicious game where the stakes and freedom and that freedom is in the form of money”.
The emphasis above is mine. if you reflect upon and come to understand the ramifications, you’ll go a long way to attaining consistent success.
Refer this blog post to a friend or colleague…
