BarroMetrics Views: Single Most Important Reasons for Success III
A reader took me to task for my grammatically incorrect English. True enough – strictly speaking you can’t have ‘single most important reasons….”. But, on this occasion, allow me some latitude. There are two reasons; but both are so joined at the hip that they form a single most important.
In my last blog we saw one-half of the equation. Today, we complete the second half. Think of persistence as the ‘motivator’ and today’s quality as the ‘actor’.
The second half is ……’self-honesty’. Now, we all lie for myriad of reasons; but in trading, self-deception is deadly sin. For a start, unless we face the reality of our results with respect for reality, we will never progress – we will be doomed to repeating the same mistakes, over and over again, expecting but not attaining different results.
And, self-honesty goes deeper than that. We need to identify the crucial characteristics of our flawed actions and change those – not just change the surface details. To explain what I mean, let me tell you about John.
John is willing to invest time, effort and money to become a profitable full-time trader; yet despite his best efforts, success eludes him. He came to me seeking solution. When we examined the courses he had taken, they all had similar characteristics:
- grandiose results – consistent ROI’s of 100% of more
- most offered ‘success without a learning curve’
- most offered success for mere minutes a day or week.
- few spoke about position sizing and the need to keep equity and psych journals.
Interestingly when we outlined a series he had to take with one of the more realistic courses he purchased, John decided to invest in yet another ‘get-rich’ scheme. The last time we spoke, he was still searching.
John certainly has perseverance; but perseverance without self-honesty as a guide leads to fruitless actions.
The great thing about trading is you have an in-built bullshit detector – your results over a large sample size. If that is in the red, you need to identify what needs to be changed, and then take the action necessary to effect the change. And you need to keep taking remedial actions until you find a course of action that delivers the results you are seeking.
So, you are in the red? Are you keeping a psych and equity journals for all your trades? If so, what trades work? Under what circumstances? If so, what trades don’t work? Under what circumstances? What actions will you take next? Etc…..etc…..
In the next blog we’ll sum up why so few succeed and why so many fail.