Coulda woulda shoulda

[thetradingdoctor 10]

James,

 

You thank the postings on this forum, as do I. You have received wonderful guidance from people here. Now, it is time for you to thank yourself for having the courage to open up and share your hopes and fears. You have begun to take a laser look inside of yourself to find your truth and your direction. That is a fantastic beginning of a life-long journey. As long as you stay in your authentic self, and speak the truth to yourself and others, you will find one thing: The truth within you is stronger than all of your fears. Your rat brain is always out to get you---in the markets and in life. It is only by being fully alive and aware in the moment that you become comfortable with uncertainty and the crashing waves of emotion that your rat brain is pouring over you every day.

 

Stay the course, James, as you are on the right path. There will be many twists and turns on the long and winding road that leads to your heart. That is where the truth is. Be gentle and patient with yourself and move forward with dignity and integrity.

 

Whosoever wishes to know about the world must learn about it in its particular details.

Knowledge is not intelligence.

In searching for the truth be ready for the unexpected.

Change alone is unchanging.

The same road goes both up and down.

The beginning of a circle is also its end.

Not I, but the world says it: all is one.

And yet everything comes in season…Herakllietos of Ephesos

 

Thanks!

 

Doctor Janice

[james_gsx 16]

James

 

You also say somewhere that the effort wasn't justified, I take a similar view.

The person that won didn't question its worth. One downside of having a critical mind is that you also pass judgements when others don't even ask the question. Your rejection of what you were being taught in school sounds similar, you judged it to be irrelevant. What you don't mention is anger, frustration or boredom reactions to the lessons. It is likely that there was an emotion blocking out the incoming information as fast as it arrived, rejection of garbage. If that is the case, recognize that emotions put up barriers and that the emotion comes from passing a judgement, that stuff is garbage.

I suspect you quit because there was nothing being gained from staying, not because you wanted to, quitting annoys and disturbs you, right?

 

You probably saw yourself as the odd one out, defective, nobody alse was having a problem. They didn't question the worth of the material, that is the difference. Your analytical mind probably makes you judgemental, impatient, intolerant and grumpy. That is where thinking more than others tends to get you. Sometimes it pays to be shallow but we don't exactly get a choice.

 

Thanks for the post, it really did help. But I really like this last part of your post and it sounds like most of my high school years. I didn't listen in highschool simply because I didn't care and I knew that high school wouldn't teach me a damn thing about anything I wanted to do in life. And yes, quitting annoys and disturbs me, and I left because as I saw it - it was a waste of time for me.

 

I have looked more into myself and noticed that I have a fear of both success and failure. I see the life I want just on the horizon and so close to grasp yet I won't make the move, I won't take the chance to do something about it. I see this in my trading sometimes as well, mostly with equities and not so much with futures (at least not yet). I see an opportunity and I sit on it, and I don't act.

 

Right now my life is in sort of a rat race that I don't like. I can live with it, it's not a shitty life but it's not what I could be making myself out to be. I used to always tell myself go take the risk, who cares if you fail might as well happen while you're young right? But for some reason, I can't even seem to take any steps anywhere. It's like I'm afraid of change, yet beg for change at the same time. I would suspect my rat brain has a lot to do with it, theres something in me that doesn't want to move forward, but my concious mind wants to sprint towards the goal. I almost want to say there is something deep down that I am yet to find and clear up, and once I do I will be on my way. But I have no idea what that could be...

 

For some reason I am afraid to go after success, not sure why. Maybe it has to do with my parents, they were never truly as successful as they could have been and it's possible I could have programmed it into my brain that I can't be successful either because they weren't. Or maybe it's because people have had such high expectations of me my whole life that I'm afraid to really go after it, kinda like some sort of paralysis.

 

I have a lot to think about. I am extremely motivated, but I'm too scared to take the first step. Maybe I just have to force myself to take the steps, and eventually my natural motivation will kick in and I'll get things done?

 

I leave for home tomorrow, I don't want to go. I know I'm returning back to my normal life and frankly I don't feel like I'm ready, like I need more time to think. But I'm grateful for how much I've learned about myself in this short week.

[james_gsx 16]

It's funny, I'm so motivated yet so scared to take the chance and go after it. I'm exactly what I tell people not to do, and I give out advice that I can't seem to take.

 

If I take a chance, I may lose absolutely everything but my family and close friends. But at the end of the day, who really cares? Who cares what some credit report says, no one can take away from me that I went after it. I had a customer at Best Buy once tell me he was no longer eligible to be employed by any company because of his issues with the IRS. But he could start his own companies, and he kept trying for years and things are finally starting to work out for him. He's got a family, and is disgustingly in debt and his credit is shattered... yet he's still chasing his dream. I could learn a lot from that guy.

 

It's easy to talk the talk, not so easy to walk the walk.

[PYenner 10]

It's easy to talk the talk, not so easy to walk the walk.

 

This is a taunt, ignore it.

It encourages you to act impulsively when your actions should be guided by informed reason. The bigger the step the greater the need for due diligence.

Business moves do involve elements of risk and the unknown.

Boring due diligence is the tool that a businessman relies on to minimize the risk and optimize the certainty. Feel good or who cares impulses are superstition, they get what they deserve, random luck outcomes.

 

When you quit school and when you did the state and national you showed yourself to be not risk averse. Risk averse is about going with the flow, another sheep moving with the flock. Most people spend their whole lives relying on the risk avoidance message and they have the lives of sheep.

It does not look like your path but impulsive gambles and unreasoned exposure must also not be your path.

 

Your Best Buy customer is in a bind, his persistence is admirable but he may have started using his head a bit late. The idea is not to get in a bind to start with.

 

I'm not sure that there is ever a good time to lose and especially not to bet the bank and lose big. It is most important that your losses are never seriously damaging, it can set you back decades and that is to be seriously avoided. You only get one life, giving away any chunk of it is not good news, young or old.

 

You may feel you are standing at the edge of a pool hesitant to dive in knowing there will be a cold shock. You can't stand there forever so the only option is to just do it right? Wrong. There are lots of ways of getting wet progressively and head first immersion looks more like a crazy gamble than any other option does. Look for alternative entry modes and alternative exits, same as trading, same goes for the % equity you expose to risk.

 

Business is a lot like trading, slow and steady progress is the backbone of it.

The risks that businesses take need to be familiar risks, you need experiance at what you do and build up. Jumping in big without experiance is asking for a hard lesson in thinking first, boring due diligence, and being brave (or just reckless?) last.

 

It will always pay to use your head first. At first you lack the informed judgement to ask the right questions. A business mentor can help, tell you the path they took and what they now think of that path.

 

I have taken uninformed risks and paid the price for it, I have also followed paths that other small businessmen have followed (more like a sheep but neither a total sheep nor a total gambler) and that did work, not spectacular but pleasing, reassuring.

 

If you can find a way of wading in from the shallow end that would now be my recommendation. Gain the experiance progressively with light risk exposure. Increase the exposure only as experiance and equity allows.

 

I don't know what big move you have in mind.

If it was quitting the job and trading full time, I might say build up the trading equity progressively first and only quit the job once the trading income says it is justified. Cover your bets. Prudence. Keep options open.

 

Avoid the either/or option that has total bust as the only other outcome.

Use your head to protect yourself from what amounts to a suicide effort, do or die. Do and do again a little bigger is what you are after. The killer outcome is not businesslike, it is foolish, desperation, end of the line stuff.

 

Microsoft was initially a nothing special company, it snowballed after Gates spotted an opportunity he had been waiting for. He did not jump in cold, he grew from a nothing special base.

 

I have a feeling you see an ordinary level of success as more like failure.

Ordinary is still the place to start and build your base from which bigger things might come.

[PYenner 10]

"I see an opportunity and I sit on it, and I don't act."

 

A Homer Simpson moment.

The nearest thing to intelligent life in the universe, reponsible for four meltdowns.

 

It seems like the rat brain doing its thing, asks a question without saying what the question is. Effectively derails the intellect, duh.

Normal ambivolence but stress or fatique brings it out more.

It would be funny if it wasn't serious.

 

We claim to be intelligent, reasonable but it is more of a hope than a reality.

The rat brain takes away reasoning and that is supposed to be a bonus in the survival stakes?

 

The human brain seems to have been designed by something even less intelligent than a human, more like a lottery in progress. Primordial mud is still mixed in there.

 

I want to be a fighter pilot, fly at 3 times the speed of sound.

Lets see, reaction time 1 second, distance traveled 1,000 miles an hour.

Prone to inattention, day dreams, fantasy, itch scratching, shopping list.

Yup sounds just dandy to me.

 

They tested the first critical nuclear reaction under a stadium in a city.

Confident it would not go supercritical before they could shut it down manually (???).

Supreme confidence in a bucket of primordial mud and reaction times a zillion times slower than fission.

In total denial about Homer Simpson moments, made of the right stuff we are.

Duh.

Nobody has a Ferrari engine upstairs, we all got clunkers from the scrapyard.

 

Bill Gates said no OS needs to be bigger than 360k.

Vista runs 1GB of resident software in the system idle state.

Humans should never bet the bank because the best of us still get it wrong.

[thetradingdoctor 10]

Primordial mud, indeed. We have the brain of the Neanderthal. Still. In times of stress, distress, anxiety, fear, overload---the brain defaults into the old ( primitive, limbic, rat) brain. It does not think, rather it reacts. The processing in the rat brain is based purely on emotion--fight or flight, kill or be killed, starve or binge, procreate or continue to prowl until you do. The rat brain does not recognize the word "No." Everything is yes, yes , yes!

Grab for all the gusto you can get and get it now and damn the torpedoes!

The new ( rational, frontal lobe, thinking) brain is much slower to react. It wants to ponder, to analyze, to think things through. In times of overload, groupthink, massive bombardment from terabytes of information, the new brain can't keep up, so it just lets the old brain do its think. Bigger and better and faster and faster and keep grabbing because you want it all and you want it now. The power of the primordial slime that is the rat brain must never be underestimated. Think back to the times in your lives and your trading when you looked --in the calm tranquility of some future moment--and asked yourself: DUH! What in the name of ##$$$ was I thinking! How could I possibly have said/done/thought that? Now, what am I supposed to do to "fix" it or make it right? This is pure madness and I couldn't help myself--could I?"

 

Your rat brain got you. It is always out to get you. We are addicted to dopamine and the promise of dopamine. The new brain is powerless in the presence of such euphoria. Game over: Rat brain wins.

 

Next game: More of the same? OR- do we learn so as not to keep doing the same thing over and over again expecting different results?

 

Thanks!

 

Doctor Janice

[PYenner 10]

So the human canoe is being paddled by two very different life forms.

They don't have a common language to comminicate in and their roles conflict when we most need them to work together.

It put a man on the moon against all the odds.

You have to wonder at the audacity and the achievement of it.

[PYenner 10]

"Next game: More of the same? OR- do we learn so as not to keep doing the same thing over and over again expecting different results?"

 

Doc,

There is a third part of the brain that learns to drive a car by reflex and takes the load off the reasoning brain, leaves it free to go into overview or even daydream modes. This seems to be the dependable part, experience, assuming it has been soundly programmed that is.

 

Is that where this leads, trade by reflex while keeping reason in watchdog mode? Like riding a bike?

[PYenner 10]

James

 

A real life story fwiw.

There is a young guy in my town, no education, no money, two kids.

Worked for my brother, minimum wage.

Impressed my brother, impressed me as someone who would not be spending much of his life working for wages.

 

I passed on to him a chunk of a business I was quitting and encouraged him to look for the next step up.

He sold that business, did a year overseas for 100k, came back.

Started in real estate signs, sold that.

Billboards, I think he still has that.

He lastest scheme was a multi megabuck vision, drought relief, but it has been ruined by the 5yr drought breaking a year too soon.

He will probably be smarting but I doubt if will slow him down for long.

He has had a taste of how it works and he knows he has uncommon talent.

 

Now I will get to the point.

Entrepreneurs are a rare breed and that makes them isolated.

No one to talk to who speaks the same language.

 

This young guy cold calls a commercial property developer and asks if he would offer any guidance on the steps he took to get there.

That developer has been mentoring him for 5 years now and has offered to do a 10 house residential development with him anytime and split the profit as a training exercise.

I think the young guy wants to do it on his own and not be taken on as an apprentice.

 

This young guys plans are not just 6 steps ahead of anyone elses, its more like 6 city blocks.

I struggle to keep my mouth shut because I am a dunce next to him and I don't want to slow him down but that is what I most want to tell him.

Turtle or hare, I dont know.

Anyone who told Bill Gates to go another way would be feeling like a dummy.

 

I don't know what the odds are.

I dont know if a CEO type will give you the time of day, but for the price of a phone call and some embarassment, maybe.

If you can pick up tips plus hindsight from someone who has been down your path ahead of you, that is way better than finding everything out the hard and slow way.

Don't waste time inventing the wheel if you can talk to someone who already makes wheels.

Leapfrog off their experience if you can.

[PYenner 10]

It's easy to talk the talk, not so easy to walk the walk.

 

Second attempt, may get closer this time.

This one is motivational in both right and wrong ways.

 

Your asperations will always be distant, thats what asperations are.

Your view of them will come and go.

If only the rat brain could be kept at an even greater distance.

 

The objection I have is that "talk the talk" encourages you to monitor measures of failure or uncertainty, which is wrongheaded and unconstructive.

It encourages you to run along a knife edge of insecurity, the road to a stomach ulcer.

Keeping your rat nibbling into you constantly.

 

Unrealistic over confidence is also to be avoided.

 

The ideal path is a persistant and realistic belief in your abiliy to achieve constructive outcomes.

On top of that is some optimism that you can go the extra mile when need the need arises.

Your realistic abilities are what will pull you through the wanted and the unwanted challenges and leave you standing a little taller on the inside regardless of what the outside circumstances may be.

 

Keep faith in your constructive abilities.

Keep that as your focus, your strength and friend.

The knife edge of uncertainty is not your friend it is baggage that loads you down.

It remains that fear of poverty or adversity will always sensibly remain part of what motivates us, it is part of the reality mix.

 

Another story.

At the first place I worked, the factory manager was always cool and balanced, nothing would him wind him up.

I would look at him and see myself as a twitchy mess in comparison.

That guy has got the right perspectives, carrying no baggage, got it all sorted out.

How come I missed the plot?

 

Turns out he had Multiple Sclerosis and with MS you cant let stress or fatigue take you down because you may never get up again.

20 years later he was on TV, in a wheelchair paralysed from the waist down.

His one liner was "I only want to have a normal life".

[thetradingdoctor 10]

"Next game: More of the same? OR- do we learn so as not to keep doing the same thing over and over again expecting different results?"

 

Doc,

There is a third part of the brain that learns to drive a car by reflex and takes the load off the reasoning brain, leaves it free to go into overview or even daydream modes. This seems to be the dependable part, experience, assuming it has been soundly programmed that is.

 

Is that where this leads, trade by reflex while keeping reason in watchdog mode? Like riding a bike?

 

 

The best of all possible worlds is to recognize mistakes as mistakes and learn from them so as to not keep doing the same thing over and over again and expecting different results. This is a big challenge for traders who want to be right, be perfect and have problems recognizing mistakes as mistakes ( rather they want to blame something or someone and not take personal responsibility).

 

It is not really a third part of the brain tha governs "reflex trading." It is a synaptic strategy which sees the signal, recognizes the signal as positive and something that has produced good results in the past, is not internally conflicted about that signal and executes with little or no cognitive or emotional dissonance. It is a trained response, so, in a way you think of it like a reflex.

 

The article I wrote in July for SFO was my attempt to at least begin a study of this in the actual context of the trader's brain. It is not the final answer,rather something to start a discussion and further study of how successful traders differ in their brain synaptic strategies from novice traders. I have received so much comment on this article, ranging from "Wow" to " this is too scientific" to "this is so easy that everyone knows about it" to " how ridiculous is this?" Whay's a girl to do? ;-) Keep studying, writing and trading and never give up!

 

Thanks!

 

Doctor Janice

[PYenner 10]

Doc, thank you.

 

In reverse order-

"Whats a girl to do?"

Pat yourself on the back and keep going.

The article was right and I hope you feel confident about that, it applies to any demanding area of learning where there is a large content of unknown and uncertain, so you may have had direct experience of watching the process unfold inside your head. Worked that way for me anyway.

 

"It is a trained response, so, in a way you think of it like a reflex."

They said the same thing about learning a golf swing, but they didn't say why. We think of it as reflex but it isn't. The golf swing can also get sabotaged by questions, even the simplest one, the putt, perhaps because it is the payoff stroke, perhaps because it has the least in common with the rest of the game.

The rat brain thrives on uncertainty levels and tends to pounce on the largest one in sight.

 

"This is a big challenge for traders who want to be right, be perfect.."

Just got bitten by this one, as you say it is about probabilities, it will never be about certainties.

The need to be right with certainty, has to be held aside as unrealistic.

So long as the trading record is adequate, useful, that is as good as it gets, or needs to be.

Got to learn to value and rely on something that will always be less than certain.

Adequate becomes the measure and humility helps.