BarroMetrics Views: Barriers to Success Patterns II
Yesterday we identified the main patterns that identify barriers to success. Today, I want to consider possible solutions.
Bottom line: the solution must result in behavioural change. But, it is useful to identify the source of the issue. In the case of first category, the trader who is reluctant to act, the failure to act can probably be traced to two of four fears identified by Mark Douglas:
- Fear of being wrong and
- Fear of losing money
Both will probably be traced back to a Default Future that has its roots in either seeking to avoid the pain of abandonment and/or seeking to avoid the pain of ‘not being good enough’. (‘Default Future’ is my label for the unconscious, automatic responses that we have learned to use from childhood to ‘get what we want’).
The solutions I would suggest are:
- Simplify the method being used. The simpler the entry and exit signals, the easier it will be for this trader to avoid ‘paralysis analysis’. This is easier said then done. Since our Default Future is ingrained in our neural pathways, we feel uncomfortable whenever we stray away and we will seek to gravitate back. For this reason…
- We need to create a strong ‘ignition process’ (Daniel Coyle, The Talent Code). We need to feel that trading is an important part of our life and something we would do for the sheer pleasure of doing it, even if it did not bring in any money. In short, if we don’t have it, we need to develop a passion for trading.
- We do this by creating a strong VISION statement and renewing that statement daily until we have our new habits. Renewal can take the form of a short visualization process.
- We need to keep a journal to record the behaviour we have adopted, the results of the behaviour, the gap between the results we want and the results of the behaviour, and observations of what we will do to close the gap.
- For most traders in this category, the problem is entering the market. The danger is we’ll play around the peripheries ‘preparing to trade’ but not actually trade.
I used to have a friend (we lost touch after I left Sydney) with this problem. The last time I saw him he was preparing to trade – he still had to place his first order. Only problem is, he had been preparing to trade for at least 10 years.
Preparation is important. But for traders in this category, any preparation longer than 6 months without placing a trade is probably a sign that his ‘preparation’ is an excuse not to trade.
So, the solutions I am suggesting are to create a strong, motivational nexus, to maintain that nexus daily until the new habit is created and, to be aware that a long ‘preparation’ is just another excuse for not pulling the trigger. And finally, the trader finds the will necessary to take the steps to remedy the situation.
By the way, my assumption for both traders is they have a trading strategy they know has an edge as well as a proven risk management plan i.e. the tools are not the issue; the issue is the trader’s psyche.
I’ll conclude this series on Monday.