The Asian Traders Investment Convention (ATIC) held in Singapore over the weekend drove home to me how important it is to our success that we clearly identify the outcome we want and the reasons for the outcome.
In Singapore, I hold one seminar a year. The aim of the seminar was always to provide an educational service that would allow newbies an avenue to take that first step to trading success.
My experience with the mentor program suggested that providing a free service was not the way to go. Not a single ‘sponsored’ (i.e. free course) student has ever graduated – perhaps one day. So, when I first ran seminars in Singapore, I charged the going rate and taught the areas I had the best knowledge: The Barros Swing, the Market Profile and the Ray Wave. Cost per head ranged from S$2,800 to S$3,500. But because overheads and cost of acquisition were so high, I normally lost a little money on the events.
The loss didn’t worry me; but what did cause concern was the fact that I did not achieve my outcome: the seminar made little difference to most of the attendees. So, they not only wasted my time, they wasted their time and their tuition fees.
So I went back to the drawing board and designed a 2-day course that focused on a quantitative journal keeping approach to identify the impulse trades; a simple position sizing approach and a plan based on Cutler’s use of the RSI – I did make a tweak here and there. Back-testing shows the plan will make a profit of around 10% to 12% with low drawdowns.
The outcome I want from the seminar is to teach the attendees to execute consistently their plan with proper position sizing. Once they attain this, they can expand their knowledge and improve their plan.
Since previously I had lost around S$5k per event, I planned my budget around that and came up with a fee of S$400.00 per attendee. If no one attended, my maximum loss was S$4000.00. All in all, a win-win situation: in my worst-case scenario, I’d lose less and the attendees had an inexpensive leg-in to success.
The trial seminar last year went well – around 63% of the trial class is making a small but consistent return. They are now ready to move on and expand their knowledge of the markets.
This year we launched the seminar at ATIC and I succeeded in niggling everyone around me:
- Understandably, I niggled my friends and fellow educators who were promoting their own S$3K seminars.
- I also niggled my wife and Ana Wang who work tirelessly on my behalf – they feel that the I am ‘selling’ my services too cheaply.
- But surprisingly, I niggled some ATIC attendees who were overheard to remark: ‘so cheap, must be no good!” And “Why does he think he is so good?”
The point is: unless you have a firm idea of the outcome you want, it would be difficult to maintain a sense of purpose. In this case to provide the attendees with a solid platform for future success preferably, at no financial cost to me. Whatever others may think of the idea, this is the vision I have.
What does this have to do with trading?
You need to know why you trade – this is part of the Vision and Goal aspects of the trading plan. And when setting the Vision, it’s not enough to quantify the dollars you want out of trading. Another Dr. George Lianos quip: ‘money is never just about money; sex is never just about sex”. What he meant was we need to look beyond the obvious: what does the dollar return mean to you?
Security, love, appreciation? And so the list continues.
By identifying the emotional premise for trading, we are on our way to identify what Denise Shull calls ‘the echoes of perception’ – the unconscious motivations formed in our youth that govern our lives today. By forming a well-formed outcome, we achieve two things:
- A standard by which to measure our behaviour and
- By understanding the underlying reasons for our outcomes, we ensure that they align with our values and in the process discover, and thus manage, our unconscious motivations. By uncovering them, we find that consistent execution of our plan becomes more a habit than a chore.