Unrealistic Expectations II

BarroMetrics Views: Unrealistic Expectations II

In Unrealistic Expectations I, I raised the question why, despite the improvements in learning theory and technology, the failure rate remains so high.

Part of the reason, lies with the way we are hardwired. Specifically

  • we have difficulty dealing with uncertainty – the fundamental nature of the markets – and prefer certainty.
  • we are geared to maximising, in the near term, pleasure and avoidance of pain.
  • we seek short cuts rather than look to do what is necessary.

The difficulties caused by our hardwiring are exacerbated when we start with unrealistic expectations of what is needed to succeed. Too often we mistake good luck for superior trading skills. Read “I Lost $700K in 3 months“. The fact is trading/investing is as much a profession as law, architecture etc. Professions require courses of at least four years to prepare us for the profession. Tell a prospective trader that it will take her four years to learn her craft and you’ll probably see her balk with disbelief.

Add to this the many, many courses promising (but obviously not delivering) easy riches with a minimum of effort and time, and you have another part of the answer. Baz asked how can a newbie separate the wheat from the chaff?

I’d suggest to first look at the promise made. If it sounds too good to be true, it probably is. An easy test is to substitute for ‘trading/investing’ with a profession e.g. ‘law’. Would you believe the claims if they were being made about a law degree?

The final part of the answer comes down to our ego. Rather than admit that what we are doing is not producing the desired results, we play a charade to tell the world and ourselves that, despite what the trading statements tell us, we are a success. This attitude stops us from taking remedial action.