As we approach the end of another year, it’s natural that thoughts turn towards reflection on the year just passed.
This has been the first year since I started full-time employment after university that I have failed to be earning more money than the previous year. A cause for dismay? Taken out of context, perhaps, but in light of the journey I began when I quit full-time work around this time 12 months ago, entirely to be expected. Even if for no other reason, I would still deem this year a success because I’ve learned a lot about how to cope with adverse situations.
Being blessed with a high IQ, a rational mind and strong problem solving skills (if you will excuse the resume-sounding language), I largely breezed through academia, and along a career progression. Most mental challenges I came up against were overcome with little effort – or at the worst occasionally I’d have to sit down and actually use my brain fully for a few weeks – but always succeeding without too much trouble. I was in the position of envisaging where I’d like to get to, in terms of mastering a new domain or skill within a set amount of time, and being able to get there.
That is, until I tried to learn how to trade at a high level.
I spent the first 7 months floundering around, without even finding the relevant information that I needed. Imagine enrolling on a course at college or university, and on your first day, you’re led into a room with 10,000 textbooks. The lecturer tells you “You’re pretty much on your own on this one. Somewhere in all of those textbooks is the single correct one that you’ll need to master this course. The others will contain small pieces of the correct information, but mixed in with a lot more bad advice. You’ll have no way of knowing whether the information you try to apply from the textbook you’ve chosen will work other than extended trial and error over a period of weeks. Even then, you might think that it is the correct information – because it still work occasionally – but not all of the time, leaving you to wonder whether you’ve in fact found the correct information but are just not applying it correctly. You might actually find the correct textbook on day 1, but because of your inability to apply the information correctly to your trial and error process through inexperience, you won’t realise it’s the correct one until you’ve tried many of the others and realised that they’re wrong, and you end up going back to it. Oh and one last thing – you’ll be surrounded by thousands of other people also searching through the textbooks, and all shouting at you that they’ve found the right one already, and that you should go and read theirs.”
That’s pretty much the story of how I eventually ended up with the information I needed after 7 months. My friend, who is also learning to trade, actually found it in the first month, but neither of us realised the significance. Even after it was rediscovered, I (in my typically overconfident manner) only read it partially, and then ran off half-cocked ready to conquer the world, only to have to come back to it 2 months later and read it properly. For hopefully obvious reasons, it’s not really in the best interests of successful traders to scream their secrets from the rooftops with a megaphone. Fortunately for people like me though, there are communities based around traders all working from the same methodology, sharing their progress and helping each other out along the way.
I tweeted recently on my personal account that “The first step of any journey of self-improvement begins with acceptance of where you currently are”. This was a harsh lesson I had to learn first hand. So accustomed was I to quickly mastering new disciplines, that no sooner had I quit work, than I was already imagining how I would spend my first £100k – which would surely be mine within 6 months – without actually acknowledging that I was a total novice, approaching something that 95% or more of people fail at. When reality failed to live up to this expectation, I became extremely frustrated, and combined with a dwindling cash reserve, almost frantic in my efforts to succeed.
You see, trading is a game of patience. You analyse a chart, spot a nice place you think something might happen, and then you wait patiently for things to play out, before making a decision whether to trade or not. Frustration and desperation are not your friends, leading to impatience and poor decisions, only worsening your plight.
As the weeks and months went by, still not finding the success I had assumed would so easily be mine, my mental state deteriorated further and further. The first genuine challenge I’d come across, and I’d crumpled pathetically. What an idiot. What a fool. How could I have thought I would be spending millions of pounds so quickly?
What I’d done is instead of accepting where I currently was in my journey, and focusing only on doing the correct things on a day by day basis, was set myself a large mental expectation of where I’d be at a certain point, without actually having any control over the variables needed to reach that point in the set amount of time.
Let’s say two men set themselves the task of building a 10 metre wall. The first man says to himself “I’m going to nail it, and build the whole thing in 3 weeks!”. The second man says “I understand that building a wall is a big challenge, seeing as I’ve never done it before, so I will just concentrate on laying each brick correctly, one by one, and not concern myself with how quickly it proceeds”. During the course of the next 2 weeks, a number of setbacks occur. Bad weather prevents the men from working every day. Vandals come and knock down parts of the wall, and steal some of the bricks. 2 weeks pass, and both men have achieved a modest wall, a few metres high. The first man, aware that his 3 week self-imposed deadline is fast approaching, becomes more frantic in his working methods, laying each brick haphazardly or not using enough mortar, to save time. The second man, under the constraints of no such self-imposition, merely carries on working slowly and steadily, laying each brick carefully, aware that his wall is growing in size, but unconcerned about when the ultimate goal will be reached.
At the end of the third week, the men take a step back to evaluate their progress. The first man’s wall has collapsed, such was his haste to reach his arbitrary goal. He is inconsolable, and wonders even if it is worth starting again. The second man’s wall is 5 metres high already, strong and sturdy. The second man is pleased with what he has achieved, but does not get too attached. He knows that he may suffer more setbacks, but if he just continues at his pace, laying each brick carefully, his wall will eventually be completed.
Since I relaxed, accepted that I wasn’t where I thought I would be by this time and that it may take a lot longer than I thought, and merely started concentrating on just doing the right thing to progress, day by day, and waiting patiently for my goal, my trading has improved immeasurably. I’ve made more progress in a month than in the preceding 8 combined. Now, each failed trade is simply a lesson to be learned, a dispassionate realisation that a nuance of my method was incorrect – whereas before, it was a crushing defeat, a humiliating slap in the face, a stinging failure to be where I expected that I should be, a cause for denial of my situation.
Whatever you’re working towards – improving your physique, building your own business, mastering a new complex discipline, increasing your social skills and self-confidence – it pays to not set yourself unrealistic expectations of where you want to be at a given point in time. The achievement is made when it is made, no sooner, no later. Provided you are approaching the problem in the correct manner (breaking it down to its foundational elements, in possession of the correct information – indeed, this could be the subject of a post in itself), then if you just keep chipping away day by day, with no prior expectations of when you think you will reach your goal, it is a simple inevitability that you will get there sooner or later.
Expectations lead to disappointment. Things are what they are, and the sooner you learn to accept that fact, the happier you will be.