BarroMetrics Views: Barriers to Success Patterns
I have been coaching traders to achieve their trading success since the mid-90s. I am still learning new methods of passing on information – the upcoming High Performance Program is a direct result of adapting the recent advances in Neurology to trading education. If the first public endeavour is anywhere close to the control group tests, I will consider it huge success.
But what I mean by success and what other mean by it may be two different things. In this case I define success as improving the abysmal stats:
“a recent study showed that 92% of newbies will blow their account (i.e. lose so much they either have to stop trading or top up) within 10 months of commencement. That is a massive 12% above the Pareto estimate which suggests only 80% will fail”.
And since the control group showed a success rate of 62%, I consider the results a success. The results of the control group confirmed my belief that traders who fail fall into two main groups:
- Those who trade without any sort of pre-trade or post-trade planning or risk assessment – commonly referred to as ‘impulsive traders’. They may plan a trade and at times will actually follow their plan. But more often than not, fear of missing out, revenge trading etc will cause them to take the unplanned trade (within the meaning of my first sentence here).
I have a great sympathy for this group – I belonged to it for many, many years (G).
- Those who find reasons not to take a trade. The reasons, taken in isolation, usually sound eminently reasonable and plausible. But as Dr. George Liason (Sydney Psychiatrist) told me many moons ago: “if you have an undesirable outcome that is produced by a behavioural pattern, focus on the behaviour and outcome; forget the reasons”.
The interesting thing about this group is that for the most part, they are articulate and intelligent. I think in this observation we find the reason why it seems this group finds harder to change.
To change means you face the fact the whatever you are doing is not working. If you are able to ‘hide’ this critical fact from yourself (I am doing ‘x’, ‘y’, ‘z’ to improve or I was unable to perform because of a one-off event ‘x’, ‘y’, ‘z’ ..…. so I am changing even if there are no behavioural results), you can pretend all is right and not face the pain of failure.
The key words here are behavioural results. Even if you are taking action but the actions are not producing the results you want, then all you are doing is swapping deckchairs on the Titanic. For example, if your problem lies with managing your risk and all your are doing is changing your entry rules, you will continue to fail. You need to take action that will lead you to your goals.
So if you fall into either group, what can you do?
I’ll look at this tomorrow.