“Unpleasant Truths” For The Path of Trading Mastery
By Chris Mark on The Capital
I get a lot of questions about trading and it’s always so hard to answer because I know that a truthful answer would discourage anyone to get involved with it. So, in order not to discourage anyone, I believe the best answer is “go and figure it out yourself.” As for my communication with you, I promise that I always communicate with you in a totally straightforward way. I will share what I know and what my experience has taught me and always be trustworthy:
Trading is great, it’s horrible, it’s easy, and it’s impossible. Trading is a fascinating journey that will test you at every possible level, intellectually, financially, emotionally, and psychologically when few other professions will test you quite so severely from a mental aspect.
At one point or another, everyone who has interactions with the market asks oneself, “Why is trading so hard?” There are legitimate reasons why trading should be difficult: markets are highly random; whatever edge we can find is eroded by competition from smart, well-capitalized traders; some traders work within various constraints; markets are subject to very large shocks that can have devastating effects on unprepared traders. Even so, it seems like something else is going on, almost like we are our own worst enemies at times. What is it about markets that encourage people to do exactly the wrong thing at the wrong time, and why do many of the behaviors that serve us so well in other situations actually work against us in the market?
There’s no clear path to learning how to trade. If you want to be a pilot, you go to flight school, but where is a trading school at? All of my trading knowledge has been trial and error, blood sweat and tears, self-questioning, and reading a gazillion of content. You can put 50 people in a room and teach them how to trade. But you can’t teach them how to be a trader. It’s a personal journey and self-discovery. The barriers to entry are so (deliberately) low; that it’s little wonder the fall-off rate is so high. Some of my past articles to reflect upon: “Cultivating your Independent Thinking”, “Buffet’s Circle of Competence”, “Trader Y Reality Check”
And because it is so personal and self-discovery journey, it is why I have barely touched this subject in the past. It’s up to you. What’s your own philosophy?
For me:
The fundamental of all human psychology: “Perception dictates Behavior.” If you perceive your environment to be threatening, you will act accordingly. Regardless of how you perceive an object, you will act according to your perception.
My income is primarily determined by my philosophy and not by the economy. As my perception dictates my behaviors, so thus my philosophy will dictate my performances and results. It is crucial to have, to know and understand my own trading philosophy. It is very important to know myself.
Your perception will dictate your behavior. Thus, your philosophy will dictate your performances and results. If you want to change your results, you have to change your philosophy.
The thing is: Success is a Mindset
Why would I (or anyone) pursue something that doesn’t guarantee anything in the end? Why would you dedicate your life and waste your time into a dead-end pursuit?
An aspect of success is doing something you love. True success is not materialistic in nature. Success is a by-product of the passion and the love you put into your creation. And pure passion and love in what you do know no limit and boundaries.
This is the mindset of a true champion in any field of endeavor.
2 Questions to ask yourself:
1. Will you sacrifice certain things in order to achieve your dream?
2. Will you continue to pursue your dream even if you knew, that there is a chance you won’t achieve them in your lifetime?
If you answer 1.Yes and 2.No — you have like a 5% chance of achieving your dream.
If you answer 1.Yes and 2.Yes — you have a 50% chance of achieving your dream.
Below are two amazing reads from two “next-door” successful traders. Just perfect and highly recommended to take these words very seriously. Copied and pasted, enjoy:
PART 1:
A GUIDE TO LEVELING UP YOUR TRADING IN 20 STEPS:
1) Stop dreaming. If you want to hit the summit, then you are going to have to make the climb. Climbing takes a lot of preparation and hard work. Whatever effort you *think* is involved, trust me you are not even close.
2) Understand that working every day until you drop, while your physical and mental health erodes, losing time, money and possibly your relationships in the process doesn’t mean you will make it. Perseverance guarantees fuck all in the business of trading.
3) The aim is to take money from anyone that hasn’t put in the work you have whilst making sure that very few people are putting in the work you are.
4) Having edge today, doesn’t mean you will have edge next week. Careers last years and come to an end overnight. You are never safe. Ever. Remember this and never become complacent.
5) Know what you want to see, where you want to see it, when you want to see it.
6) Try to enter the market as close as possible to where you are wrong on your trade idea.
7) Whatever you think the market is going to do be prepared for it to do the complete opposite.
8) There is no such thing as a free trade. Not even when you are at breakeven. If you are up 90 ticks and with a stop at breakeven you get stopped out, you have lost 90 ticks. Don’t be a fucking mug.
9) If you don’t know who the cunt in the market is, it is almost certainly you.
10) Taking the best trades is not hard. It’s trying not to act like a cunt in the meantime that is the hard part.
11) It is a bad habit to make the same mistake twice. But it is unforgivable to make the same mistake a third time.
12) If you have a problem, the process to solve it is by asking yourself:
-What is the problem?
-Why do I have it?
-How will I solve it?
Most people leave out the second part. Without considering why you have a problem you cannot effectively solve it.
13) Once you have made a decision commit to it. Grow a pair and act decisively.
14) If you are going to use social media, understand this: If you think someone saying they made 100% in a week is a great trader, you are a cunt.
15) If you call a trade on Twitter and lots of people agree with you, prepare to be wrong.
16) If someone congratulates you on a trade you are in, make a note on the chart of where they said it. Save it to a folder. Spot the pattern.
17) Forget withdrawing money anytime soon. The more you make, the less you should withdraw to spend. Let compounding do the work and don’t blow your load on leasing a car that begins losing value the minute you drive of the forecourt.
18) Journal everything you do.
Question Everything you read
Test every idea you have
19) Don’t bet the farm on a trade. But don’t trade like a pussy or you will never have a farm to be in the first place.
20) Ask yourself after every trading session the most important question of all: Am I acting like a cunt?
PART 2:
In trading and investing, the taste for “unpleasant truths” is slim.
This is human nature… it’s always been this way. And we know something quite important. We know it with the certainty of gravity:
-The millions who take the “comforting lies” approach to trading will fail.
-A large portion of this group will quit in disgust, never to trade again.
-Another portion will become “permanent dabblers,” screwing around forever.
-But a small portion, a remnant, will tire of the lies and finally seek truth.
Simon and Garfunkel: “A man hears what he wants to hear, and disregards the rest.”
Truer words were never spoken. What most people “want to hear” is that a trading method or system can make them successful, with a small amount of capital and minimal effort, in three to six months.
So when we come along and say nope, it’s more likely to take three to six YEARS minimum… with a LOT of effort and focus and sweat equity on your part… and by the way, your focus should be on training and growing your first few years, with the life-changing profits coming later (via scale)… how do you think that goes over?
Like a lead brick, that’s how. For those still hooked on comfort at least.
And yet, for those who have “taken their share of beatings” from markets… who have wrestled with the real pitfalls and challenges of trading… who have gained enough knowledge and seasoning as such that the “comforting lies” simply aren’t comforting anymore… the “unpleasant truths” become something different.
The unpleasant becomes pleasant after all.
How so? Because after passing through the “comforting lies” phase, for many (who are honest with themselves) there is a moment of confidence-shattering doubt. There is the question thrown out in despair: “Is it even possible to become a successful trader at all?”
We’ve seen it on Twitter and message boards. Maybe you have too: Call it “failure fatigue.” The trader who has burned up all his patience for the “comforting lies” stage, banged his head on the wall 500 times — or maybe 5,000 times — and has finally exploded, raging to anyone and everyone who comes across his posts that no, no, no, it can’t be done, you’re all full of shit, trading is all a bunch of lies…
Or they go and start a newsletter and spout eternal bearishness and rage against the machine. Maybe they call this trading service SouthmanTrader or something along those lines… but I digress….
Here’s the thing… It can be done. And there is ample empirical proof of this. And theoretical proof, and overwhelming data. (For those not emotionally bound to blindness that is.)
On progressing to a certain stage of maturity and readiness, the unpleasant truths become pleasant because they are revealed as the true path forward. The only path forward. Insanity has been defined as “doing the same thing over and over and expecting different results.” At a certain point in the struggle, for an honest few, the wake-up call comes. Then, with enough searching and questing, the path reveals itself.
And then comes the hard part. Morpheus to Neo: “There is a difference between knowing the path… and walking the path.”
-First there is the false path (comforting lies).
-Then there is discovery of the true path (unpleasant truths).
-And then there is getting on it…
Becoming “the one”
There is a scene in The Matrix where, after questioning Neo on being “the one,” The Oracle tells him:
“Being the one is just like being in love. No one can tell you you’re in love, you just know it. Through and through. Balls to bones.”
You can have that feeling as a trader. Not at first, and not automatically (just as neo had to take some time, take some beatings, and learn to believe in himself).
But having progressed far enough down the path of knowledge and experience and training, you can know you are “the one”… in the sense of having made it as a trader.
You can wake up in the morning and know — not half-believe, or try to talk yourself into believing, but know — you are a master of your craft. That you have earned the right to call yourself a trader… and that the profit goals which you seek to achieve, will be achieved, short of a meteor striking you down.
But you don’t get to this place through wishing or hoping or ginning up lots of enthusiasm. You get there by walking the path. The path of training and knowledge and experience. The path is not months or weeks but years long… and in exchange provides freedom and benefits, financial and otherwise, that will last your entire life.
This is an important point so we will indulge all caps. Walking the path is a PHYSICAL FORWARD PROGRESSION. This is why enthusiasm is great as an ignition boost — a way to get started — but it won’t take you where you want to be. Progress along the path is NOT a self-esteem trick. It is NOT a “positive affirmation” thing. It is an actual physical progression.
Memories have a literal physical presence in your brain. Connections between memories have a physical presence in your brain, via the highways and byways of neurons and synapses. This means, as you progress along the path of knowledge and experience as a trader, you are ACTUALLY BUILDING SOMETHING. You are literally BUILDING NECESSARY CONNECTIONS within your PHYSICAL BRAIN.
I shout (the all caps) because this is another reason the “comforting lies” are so obnoxiously stupid. Someone who suggests you can have the seasoning and training of an experienced trader quickly and easily might as well tell you it’s possible to build a skyscraper in two weeks with your bare hands. It takes time to build a structure… including a knowledge and experience and emotional reference structure, with a physical three-dimensional presence within your own brain.
The Martial Arts Paradigm
In some ways, trading is comparable to a martial art. If someone said “my system will take you from zero to black belt in three weeks,” you would laugh out loud. (Or at least I hope you would).
The notion of becoming a trained martial artist (on par with becoming a trained trader) without requisite time and effort applied — with zero time and effort, really — is beyond ludicrous. In fact, it’s insulting. The prospect of becoming highly proficient and combat-trained over a period of years, however — via putting in the effort, with the high-quality feedback and instruction — has genuine merit. What you put in is what you get out.
The martial arts / trading comparison is also apt in respect to the above and beyond benefits acquired by training.
I’ve never heard of a serious martial arts practitioner who did it “just for the belt,” or solely to handle themselves in a fight, or to stay in good shape or some such thing. There are always reasons, and discovered benefits, that go much deeper, touching on things like personal philosophy… self-awareness and self-confidence… way of life.
And so it is with trading…
Attuning the subconscious
In the 1920s, a German philosopher named Eugen Herrigel went to Japan to study archery. Except he wasn’t really studying archery, he was studying Zen. Herrigel wanted to truly understand Zen from the inside out. He achieved his goal through a combination of theory and practice, over a six-year span of becoming proficient with the bow.
Years later Herrigel wrote the amazing little book “Zen in the Art of Archery,” which contains the following observation (in the 1953 introduction) from D.T. Suzuki:
“One of the most significant features we notice in the practice of archery, and in fact of all the arts as they are studied in Japan and probably also in other Far Eastern countries, is that they are not intended for utilitarian purposes only or for purely aesthetic enjoyments, but are meant to train the mind; indeed, to bring it into contact with the ultimate reality. Archery is, therefore, not practiced solely for hitting the target; the swordsman does not wield the sword simply for the sake of outdoing his opponent; the dancer does not dance just to perform certain rhythmical movements of the body. The mind has first to be attuned to the Unconscious.”
“In the case of archery, the hitter and the hit are no longer two opposing objects, but are one reality. The archer ceases to be conscious of himself as the one who is engaged in hitting the bulls-eye which confronts him. This state of unconsciousness is realized only when, completely empty and rid of the self, he becomes one with the perfecting of his technical skill though there is something in it quite of a different order which cannot be attained by any progressive study of the art.”
What Suzuki calls the Unconscious, we know as the subconscious. When Suzuki speaks of an element “which cannot be attained by any progressive study of the art,” he speaks of training…. The actual practicing and doing of the thing.
This reveals another puzzle piece — more illumination as to why the 90 percent fail. Herrigel, based on his writings, was a devoted and attentive archery student. If it yet took Herrigel six years to fully master something as surface-level simple as “letting the arrow shoot itself” — i.e. gaining mastery-level proficiency at archery — can we expect less of trading?
Can we really expect to take a mastery path measured in years, and compress it down to weeks or months (or no time at all), or otherwise count “time served” via flipping through books on weekends? No.
This is another “unpleasant truth” to most ears, yet pleasant to those with ears to hear… because it highlights that the path, though extended and challenging, truly does exist.
When you think there is an easy road, you don’t want your delusion taken away. When you realize the easy road was a lie, if you still burn with desire to achieve your goal, then the confirmed existence of a hard road is good news, not bad. (The hard road reality further explains why most do not walk it. Too long! Too much effort!)
The ideal training scenario
But returning to the trading vs martial arts comparison… let us say, for theory’s sake, you wanted to attain a black belt in a certain martial art. And not just any black belt, but a ninth-degree black belt from a world-class teacher. How would you go about doing it? What would the ideal scenario be?
The optimal setup, if you were dedicated enough, might be moving to a dojo in the rural wilderness of Japan — cut off from disturbances of the outside world — where you could train with a handful of fellow students.
This would provide access to the instructor, whose insights are vital… access to proper knowledge, without which you might stumble for years in the dark… structured routine and motivation to train… and access to your fellow students, who would provide friendship, encouragement, and comparative notes along the way.
In training to become a trader, something similar might be ideal.
Going off to some remote setting, surrounded by fellow traders, wholly devoted on both an individual and group level to mastering the craft. If it’s going to be a long journey, you want guidance and friendship and shared milestones along the way.
The “dojo in the wilderness” isn’t’ realistic, of course.
But something comparable is.
Originally published at www.trading-manifesto.com
