Saturday, October 31, 2009

When Trading Dreams Seem to be Fantasies

Well, I'll date myself in the goth scene by telling you that I'm listening to
one of London After Midnight's tracks from "Violent Acts of Beauty" while writing this. What else does one listen to on Halloween?

The song, though, is about disappointment: what happens when everything you felt was perfect and pure were but nothing more than fantasy.

Just about every trader I've known has gone through that wrenching period of doubt. The successful ones get to the other side, where the fantasies are replaced by hard--but useful--realities.

The fantasy is that you'll start trading and, within months, begin making a fine living. You'll be your own person, doing what you love, making plenty of money, and having time for all that is important in life.

It doesn't happen. Not within months. Not within trading, nor within any other performance discipline.

You don't pick up the golf clubs for the first time and, within months, join the PGA tour. You don't go on stage for the first time and, within months, land a contract on the Broadway stage.

So much of what frustrates us in trading is not the trading itself, not the markets. It's the expectations--the unrealistic expectations--that we bring to our trading. The demands that we place on ourselves. The fantasies that ensnare us.

You start as a novice and first grow to competence. Only after that do you hit that elite level of expertise where you can make a living from your performances.

But if you have to reach competence before you reach expertise, that means that when you start out you are *not competent*: you are incompetent. It's not easy to embrace that reality. For months when I first swing golf clubs or play a piano, I'm not going to impress many people. And that's OK.

Because in the beginning, you don't have to be good; you just have to get better.

And better.

And better.

Sean sings about "going to the open sea and...going to say goodbye to me". To kill off our fantasies and unrealistic expectations seems like a kind of suicide. Some people can never let them go. But once you've enter that sea, you can find a different "me": someone who finds opportunity in setbacks and pride in the real, challenging, and sometimes wrenching efforts that define the path toward genuine success.


RAW said...

Timely. Uncanny. Don't know about the music tho :)

Ionized said...

Well said. I had those fantasies, spurred by random success in the pinksheets as my first time ever trying stocks. Thinking it would always be that way, I embarked down the path of the big board trader, and only recently began to realize the realities as I traded a 33k account down to a margin call @ 25k in a 2 month period. In a way I am grateful for the wake-up call that gave, and am finally learning the proper methods of risk and money management. I'll continue down the path through whatever growth it takes to succeed. Your websites are extremely valuable, thank you.

Steve Willette said...

Thank you. I appreciate the encouragement your blog posts and book, "The Daily Trading Coach" offer.

Tahoe said...

As always Brett, fabulous post. Thank you for sharing this will us. Being held back by behaviour and emotions linked to unrealistic and unreasonable expectations can be a monstrous hurdle to overcome. For my trading, identifying, acknowledging, understanding and accepting our own incompetence has been a monstrous step forward.

heywally said...

I enjoyed the song - TY.

A little Halloween Pink Floyd:

E said...

I have been fortunate to discover people like Dr. Brett and Jim Rohn who have had an impact on the qualty of my thinking.

It starts with a dream; whether it turns into a nightmare or not depends on our talents,effort, study, patience, and resolve.

Thanks Dr for another great prescription.

MaskedFinancier said...

Thanks for another great post Dr. Steenbarger.
As you know I advocate the use of poker as tool to teach investing.
And in relation to your article here poker is a great way of demonstrating that it is only through consistent hard "grind" that capital is built up.
Naturally there may be some cases where there is significant upside in a particular investment (just like a big win at the no-limit holdem table) is generated, but there should not be expected.
The focus on potential trading gains should be on the power of compounding in the context of a long term consistent strategy.
By starting off at small levels and trading in a conservative way as capital is built up then future trading gains can be greater, but not based on some sort of lottery like wins on a regular basis early on. Rather like gradually moving up limits in poker.
Keep up the good work.
John (aka The Masked Financier)