Forex Trading is like stand-up comedy and traders are like stand-up comedians!

[marc walton]

Member Michael is an avid competition entrant and here is an excellent article with some great advice. in amongst the analogies, for how to become a better forex trader & especially how to bounce back when things are not going as planned:

Trading is like stand-up comedy and traders are like stand-up comedians!This is true in so many different ways but more than anything its really true in one crucial, make-or-break, way. In both activities, unless you have truly developed your “bounce-back” set of muscles, you are destined to “die a death” and it will be a very painful one. Not too many make it in either field, but those who do have, without exception, developed their bounce-back muscles!Imagine you are an aspiring stand-up comedian and you get a spot opening the show on amateur night at your local comedy club. The place is half empty (or half full??), drink isn’t generally flowing, the audience is cold and no-one is even really focusing in on you never mind laughing at your gags, and to top it all the only inebriated punter in the joint decides to have a pop to impress his friends and starts heckling you.

This is you start really earning your pay, as they say, but no-one is paying you! In fact, rather than earn your pay, statistically, this is where you shrink and die, vowing never to set foot in a comedy club ever again!Not so for the pro. Pros don’t open the evening anyway but moreover even if they had to and even if they found themselves in a similar situation they would view it as a gift from the comedy gods.

The heckler is almost certainly a drunken amateur and is going to be the sacrificial lamb to the slaughter. The pro has been heckled many a time in his/her career and has developed some killer come-backs and, for sure, before long, the audience will be cracking up with laughter, laughter at the poor heckler’s expense, and thus it will be the heckler who dies of embarrassment not the pro.

The pros bounce-back muscles are his/her pride and joy, and s/he loves the opportunity to publicly display them!Sad demise or a happy ending, it all depends on your bounce-back muscle power. Now think of the beginner/intermediate trader, like you and me, who has found a decent system (STT/M1/M2 etc) with a positive expectancy, who has back tested it successfully, who has assembled a decent trading plan with good money/risk/trade management and who has the self-discipline to plan the trade and trade the plan and not succumb to emotional deviations from it. Everything goes well until we encounter the “losing streak”.

No matter that we were forewarned that ALL systems/methods have them, no matter how much back testing we did, it mentally and emotionally drains and totally exhausts even the strongest of us when we “experience” loss after loss, after loss, after loss with our new system. No matter what the “risk of ruin” or losing streak probability tables show us, no matter how much we intellectually understand the situation, it hurts like hell and haunts our thoughts day in and day out. The outcome is nearly always the same; we abandon the system and continue our search for the Holy Grail, a system which wins nearly every single time.

As humans, we love pleasure and we hate pain, so we continue our search to find something that feels just great to trade! Ironically, often the darkest hour is just before dawn and we walk away just before a string of winners was coming our way. Just as the pro comedian saw the heckler as a godsend, the string of losers was just bringing us closer to our cluster of winners, but we weren’t around anymore to enjoy it! We had a very weak bounce-back set of muscles. We hadn’t seen it all before, nor did we have the depth of knowledge and practical experience of having previously come out of the other side of a similar situation unscathed. We hadn’t got the X Factor!

Furthermore, if this happens to an aspiring pro just when he’s establishing himself it will usually be fatal. They have just got on their feet, convinced an agent or manager to come along and see them perform and it’s a total blow out; end of story usually, even if every previous gig had gone down a storm. While with the pro, if a show goes badly, and they do, the powers that be usually just put it down to an “off night” or a strange audience, maybe a group of foreign businessmen were in and the language was too colloquial, whatever, no big deal. A slight hiccup for the pro, a fatal blow for the beginner!

So how do we build up this set of muscles so we can survive and thrive? Well a new thread on the forum would be good, a thread where we could all share our experiences and strategies/tips for bounce-back muscle building. Dean, Mark, Pierre and others have obviously managed it and will, undoubtedly, have some interesting stories to tell. Meanwhile, let me offer a couple of exercises, one for a very specific muscle and one for the more general set.It’s just a given that we will experience a losing streak but our brains just aren’t wired well to cope with probability.

You can see this in the way that the population in general, not just traders, deals with and reacts to clusters of events. When we think of random things we expect them to be distributed evenly for some reason, but this is totally wrong. In olden days, for example, if a number of farmers in the same area had cattle go ill the local populace would assume there must be a reason for this, and they would usually blame the local witch.

Nowadays we might blame mobile phone masts or something. Of course not all clusters are random but in reality we should expect clusters in probability games, even in systems with a proven positive expectancy. If you dropped a tin of ball bearings onto a flat empty floor you wouldn’t expect them to be evenly distributed in a grid each the same space from the other when they stopped moving would you; if that happened you would think it spooky or a manipulated situation!

The natural thing is for there to be places where there are clumps of balls and others where there are gaps. Scientists name these clumps “clusters”. So repeat after me, “l must expect clusters of losing trades, its only natural!” No, don’t worry we don’t have to keep repeating a mantra, but we do really need to accept this “reality” of clusters in our conscious and subconscious minds, and a little experimenting may help us to do just that.As Traders we trade money so let’s try clustering some cash!

Take a handful of coins, l find coins of a similar size to be best (e.g. £1 coins), hold them in your hand at about waist height and drop them. While in principle they could all fall nice and evenly, the higher probability is that you will get clusters in their distribution; those are your losing trades right there. Do this over and over until you are seeing repeatedly right before your very eyes that clustering is a reality and to be expected; clustering is normal, just as a cluster of losses is “normal” in trading.

It’s no big deal; it’s not a game changer! Do it again just to let your mind’s eye see it in action one more time; embed it deep in your mind and repeat the experiment if you have too next time you have a few losers. (Top Tip: save time searching on your hands and knees for lost coins by dropping them from a similar height but onto a bed!)

Continued in Part 2

[marc walton]

Forex Trading is like stand-up comedy and traders are like stand-up comedians!


Part 2

The second exercise is more of a general one but is still vitally important for success; it’s a technique that is also used by top athletes and high level performers in many fields of endeavour.

This exercise is concerned with our general aspiration to be a successful pro trader and achieve some measure of financial independence. It’s concerned with our goals and perhaps even dreams, and also involves imbedding images etc into our subconscious minds.

It involves targets.There are at least two kinds of targets in this respect, one is more known and the other less known. A striker in football has a very clear and defined target, the area between the goalposts; he or she knows exactly where they have to put the ball to achieve their target of scoring and can hone their skills to do just that. The second type of target is less tangible or objective, the target is not so much known as believed to exist or be possible. This is like Edison trying to invent the light bulb or Dyson his cyclonic vacuum cleaner. They had to have faith it could be done, and that they themselves could do it. This type of target is far more subjective, for want of a better word, and it is much easier for a person to give up on this type of a goal.Trading definitely falls into the second category in my experience.

As a lone retail trader l have met very few really successful traders and even when l have it’s generally been at a distance (online) and has required some kind of faith in the veracity of that person’s claims. I am sure it’s quite difficult to imagine what trading mastery would look like for most of us on the forum, after all we are not catching the train up to London every morning and rubbing shoulders with experienced and successful pros on a daily basis, in fact quite the opposite, we are “mixing”, at a distance, with lots of “aspiring” traders just like ourselves and many of them are failing and will ultimately give up and leave the field of play. So to increase our odds of success and strengthen our bounce-back muscles to help us carry on when we have the inevitable setbacks and clusters of losses, we have to somehow turn our subjective goal INTO a more objective goal. Without a firm belief in ourselves and how realistic our goal truly is it will be all too easy to walk away when the going gets tough. We have to transform wishing and hoping into belief and then go even further and turn it into a form of “knowing”, knowing we will make it in the end despite whatever hardship and misfortune comes our way.

To truly succeed at trading, or at anything, our goal cannot be fuzzy; it must be clear and visible to us. We must believe and have faith in it and that belief cannot be just “lip service”, it has to penetrate to the very core of our being. We have to write it into our very DNA or we might as well give up right now and save ourselves a lot of unnecessary pain. Easier said than done you are probably thinking. Yes, but we are always told that trading in essence is simple BUT not easy; they are two different things. It’s simple, so we can definitely do it, but it won’t be easy.

Are we up for the battle, can we enjoy the journey despite the hardships and reach that destination which attracted us to this endeavour in the first place?It’s our choice. This is how Tom Willard, a renowned trading educator, says we should tackle it…“When your goal is not really clear/visible, it’s easy to throw in the towel. Without a clear/visible goal that you believe you can attain, one starts to logically question “why go through all this pain when I can’t do this anyway?”So – how do you get faith and belief? People all the time say they BELIEVE and have FAITH – but they don’t at their CORE…in actuality it’s just lip service.How do you get it at your core? You have to have a strong self image and the identity of someone who is achieving what you want to achieve.

Start by choosing what you want to be, have and do.Next, create the FEELINGS in yourself that you have already achieved your goal.Keep doing that, day in and day out – really use your 5 senses – what do you see as this successful person? What do you hear? What do you smell? What do you taste? What do you feel? This could be the type of clothes you wear, the food you eat, the smell of the beach or mountain or far east street vendor’s cart……let your imagination take you there.Keep it up consistently, day in and day out, and you will be amazed at the changes that can start forming in your life.”So, again we have to embed things into our subconscious. Wishing and dreaming is not enough. Will power alone is not enough. We need them but we also have to make a massive massive effort, there is no way around it, these are the facts of the matter.We have to find a method which suits our trading personality and become masters of that method. We have to put in our 10,000 hours or so to achieve that mastery.

A mentor/coach is a vital and for most of us an indispensable companion along the way. Good ones are available and you will probably not have to look beyond this forum/site to find yours. Can we really do it, do we have the inner power? Here’s a little story to finish up with, another muscle metaphor! Elephant trainers tether a baby elephant by a thick rope to a stake hammered into the ground in order to limit his range.Whenever the elephant tries to escape,he is quickly restrained by the bond, and he learns that he doesn’t have the strength to break away.As the baby grows the trainers reinforce the boundary set by this rope.By the time he is fully grown the elephant weighs several tons and is in fact capable of feats of enormous strength. But, by this time the trainer could actually tether him with a slender thread and the elephant still would not try to escape. The elephant has become so conditioned over the years he has no idea of the true strength he possesses, easily enough strength to actually free himself!

So in 2012 let’s change our landscape and break free from our tethers. We need to envision what we want to become and formulate our road map to get there.We need to realise our potential. In this forum we are lucky enough to have the both the practical tools to construct that road map as well as the mutual support and sense of belonging that a community of friendly like minded individuals provides. We have all the necessary pieces so l hope we can all finally put together the jigsaw puzzle that is trading in the coming year and achieve some wonderful outcomes!Best wishes,Michael.