BarroMetrics Views: Default Futures
I am intrigued by the reasons why the percentage of traders failing to make a profit over time is so high. The evidence is that despite advances in trading technology, psychology and trading methodology, successful traders are as rare today as they were in the 1920s.
To this end, I have begun a book on this subject. My research shows that the concept of ‘default futures’ lies at the heart of the failure.
‘Default Futures’ is known by many names, ‘repetition compulsion’, ‘fractals’, etc. The idea is simple enough. Our habits are created early in life and are usually brought about by a child’s perception of how to navigate life as painlessly as possible. Let me give you an example:
Ray was born into a low-income family. To make ends meet, his mother takes in sewing jobs that occupy her time from Friday evening to Sunday evening. Since the sewing takes up all of her time and energy, Ray is farmed to his grandmother Friday night who then returns him on Monday morning.
Now from an adult’s perspective, his mother’s actions are reasonable. But, for the child, all he knows he is not wanted by his parents. So, to avoid the pain of ‘being abandoned’, he devises strategies to form strong bonds.
If Ray now interprets losses as ‘abandonment’, one result may be to hold on to losing trades with the result that he is unable to turn failure into success. The insidious nature of ‘default futures’ is they operate on a subconscious level. And, because the futures have been with us for so long, change is uncomfortable. Moreover, assuming that we do become aware of the unconscious responses, we’ll find that trying to change the ‘default future’ through sheer willpower usually fails.
Now, the thing with ‘default futures’ is you end up doing the same thing over and over again. And, if you do the same thing over and over again, you will continually attain the same result.
If you accept this reasoning, then it’s no wonder why so many fail. Firstly, most newbies aren’t even aware of their ‘default futures. Secondly, even if they become aware, their strategies for change doom them to failure – their primary focus is on acquiring knowledge about trading, rather than on changing their ‘default futures’. As a result, for most traders, the lessons on trading are never integrated, and if integrated, are never implemented.
This lesson was recently brought home to me.
About 2-months ago I held a primer class on the Barros Swing methodology. Part of the course includes one evening’s instruction on the application of the material learned. To take part, the student needs to prepare his trading plan, submit it, together with an action plan for the evening.
The live session is to take place on Oct 12, and so far, only 10% of the attendees have indicated they will attend.
My question is, why wouldn’t you attend? I’d certainly make every effort: I’d take the view that I’d need to attend to make the transition from theory to skill. I suspect that the failure to attend lies in the individual ‘default futures.’
But, you may ask, if sheer willpower is not enough, then what can we do to change? More tomorrow.