I was going to write on trading plans, a subject that will probably take a couple of posts. But Ms A. Wang sent me a blog by Dr. Brett Steenbarger, Virtual Trading Groups: Getting to the Next Level, which contained a topic I thought more appropriate to end 2007.

In that blog, Brett writes that traders would benefit by interacting with their peers provided the group consisted of members “sufficiently experienced to offer value to others, ones sufficiently committed to putting time and effort into learning, and–perhaps most of all–ones sufficiently secure to maintain an open kimono and share all the successes, failures, lessons, and letdowns”

The question I’d ask is: who would join and are they the ones that would most benefit from such interaction?

My experience with groups is: those most willing to join the groups are the ones that need it least. Who would join? Usually the classes NLP practitioners call ‘unconsciously competent (the experts) and the consciously, unconsciously competent (the master teachers)’.

What class of traders would benefit most? Two classes:

  1. Those NLP practitioner’s call ‘consciously incompetent’ (those that know they don’t know and want to do something about it) and
  2. The ‘consciously competent’ (those that have yet to internalize the habits of success).

But yet it is precisely groups (1) and (2) that either fail to join or fail to persevere with the group.

At least that has been my experience.

There are major benefits from joining such a group - not the tips, you learn little from tips; it’s in the exponential growth of the learning curve that we most benefit. For the novice the benefits lie in:

  • The exposure to a probability mindset and the different ways that mindset finds its voice.
  • In the fact that there are many ways to make money;
  • In the fact that the successful traders will lose money in many trades; but
  • Most of all, the novice learns that success lies in keeping a gulf between the Avg$win and Avg$loss.

For the successful trader, the group forces him to challenge his assumptions and heuristics - a challenge that may go unheeded when trading alone. In a sense, the successful trader will benefit less than the novice but he will be the one more likely to join and stay.

In 2008, I’d like to see the idea of virtual trading groups take hold and proliferate. I’d like to see consigned to the rubbish bin (where it belongs), the idea that trading/investing is a profession that has a license to print money. In this part of the world, we have ad after ad telling us how to ‘turn $10k into $1M in 12 months for just 15 minutes a day!’ This unrealistic expectation is probably the most important reason for the dismal rate of success among newbies. Finally, I’d like to see the percentage of successful newbies rise from the current 10% to 20% to 40% and more.

When I started trading over 30 years ago, we did not have the assistance newbies have today -unless you were a local in the pits, you learned by trial and error. Now, it’s very different - today, we traders live in a privileged world where success is there for the taking - we only have to do whatever it takes to succeed. Our success lies entirely in our hands; let’s make 2008 the best year ever!

Happy New Year!

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