BarroMetrics Views: Purpose in Trading

With trading, as with most things in life, many apparent contradictions and disagreements are resolved at the ‘purpose and assumptions levels’.  Our achievements happen when we:

  • define the purpose of an action (consciously or unconsciously),
  • plan the action (consciously or unconsciously),
  • review the results,
  • note the gap between the results we desire (i.e. our purpose) and
  • adjust our actions next time to account for gap.
  • once our actions bring about the result we desire, we integrate them into our psyche so that they become habitual and finally
  • we continue to monitor the results to ensure our actions are continuing to bring the results we desire.

We fail to achieve when one or more  of the steps is missing - usually the ‘noting of the gap’ and ‘adjusting our action’.

In simple matters, we tend to take the steps unconsciously; in complex matters like trading, we need to apply conscious thought and the actions we take over time integrate the conscious with the unconscious i.e. we integrate our reason with emotion.

Trading is a complex matter. So if we want to improve, we need to take the steps consciously. However,  our brain’s response to change i.e. for taking a new action that suggests an unknown result is the same as that as when experiencing  pain.  As a result, we often prefer to stay with ‘the known’ and its adverse results rather than take new actions that may lead to the results we want.

But in  trading, as with other areas in life,  to achieve what we want requires we do what is required in spite of the difficulties we encounter.

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