SIDELINING - Most people fail at trading because language has already set them up for failure. Language? Cmon Joel! What language are you talking? Gibberish? Ok...settle down there. When you think about it the way I am about to explain it, I think you will see my point very clearly. This thing that you all are doing here and that you all aspire to do over the long term, is a thing that we call 'trading.' And there's the problem right there! We are putting ourselves in a dangerous world that is the market, where the thing we are trying to do is defined by taking action. When you think 'trading,' you think about taking positions and doing. You are predispositioned to think of it as something you need to be doing in order to be successful. After all, how can you be called a trader if you're not trading. Clearly you need to be trading to trade. But as I see it and as I have come to find my success in this area, we would all be better served if we defined this thing that we want to be doing as 'sidelining.' Most of what trading is to me, is actually 'not trading.' I don't take a position unless I feel very strong about it and if I don't feel super strong about it, I sit back and wait. So I really am more of a sideliner than I am a trader.
DANGEROUS ASSOCIATIONS - Now I recognize there are some out there who trade quite frequently with great success. But I can't identify with those people and have managed to find my results through the adoption of an ideology that has me feeling good about being on the sidelines and excited whenever the market comes to me on the sidelines and begs me to come play. And so, what I've realized in all of this is that we grow up in a world where most of us watch sports and play sports. In this world, we glorify those out on the court (pitch, field, ice etc) and dream of being that great athlete who does it better than anyone else out there. We associate the success of these athletes with time spent in the game and the results of actions while out there. At the same time, we don't get too excited about being on the sidelines and sitting on the bench. Of course, this is a dangerous way to think if you come into trading with that mindset. And why wouldn't you? It's all you know.
MARKET WATCHER - When people talk about the similarities between trading and poker, they talk about the risk management and the ability to read situations. But I would argue that the biggest similarity between the two, is that unlike sports and really most other things where we are taught about the success in doing, in poker and trading, it is about the success in not doing. If you can sit back, watch, and learn to be disciplined, while appreciating the value in not doing, your odds at success go way up. So the secret to trading (in my opinion) is learning the art of not trading. I suppose when I talk about language and the way it has messed up odds to succeed in trading, we also have what to learn from poker. You see....they call someone who plays poker a 'poker player.' Perhaps we should start calling someone who speculates in markets a "market watcher."