Knowledge is mandatory to be a successful trader but knowledge alone does not guarantee success, much more is needed.
The application of new knowledge requires that repeated experiences of the new awareness be executed many times over. Discipline is required to repeat the experiences in the face of fear and of unsuccessful individual outcomes. A bombardment of the subconscious is required from all fronts. Of the many techniques used to achieve this, discipline is just one such technique.
The repeated experiences of the new awareness will eventually re-program the subconscious mind; then new awareness becomes a new belief. Repeated experiences of the new belief energises the new belief which will ensure that the belief becomes first nature as a habit. At this stage the knowledge will be a part of who you are—and discipline, force or strain will no longer be required to execute the habit. Execution will be effortless without struggle, strain or pain. This is why there is more to successful investing than just money.
Examples of successful transition are riding a bike, driving a car, brushing your teeth, writing and reading in your native language or even crawling, walking then running. I’m sure that you can think of many more. It is no different with trading.
Can you change your ways? Can you transform yourself? Well, consider the following:
• Books on general psychology use the word ‘wiring’ when discussing the way that our minds work. The wiring, or neural pathways, is created in the brain by learning new information and formulating new beliefs which manifest themselves as newly formed habits.
• New neural pathways can be established in your brain if you are prepared to step into a process to establish them.
• This can be done at any age.
• A process to embark on creating new neural pathways with respect to trading is detailed elsewhere on this Blog, in the documentation for the SPA3 mechanical trading system and in Mark Douglas’s book ‘Trading in the Zone’.
• The process uses exactly the same learning capabilities that you have used your whole life. The major difference is that you will be choosing what you want to learn rather than being bombarded by your environment which has usually occurred without your conscious choice.
If this material is challenging you, consider how you would go about learning to read, write and speak a new language. Would you just head out there and start engaging a conversation with somebody who speaks your target language? To read the target language would you acquire a book written in it and actually try to read it?
Obviously not! You would start a process of learning. You learn the mechanics of writing the language and of shaping your mouth and tongue to speak the language. This is exactly the same process that you went through as a toddler and juvenile learning your native language.
The process would probably entail classes and / or DVD’s or CD’s, vocabulary lists and practice through repetition of execution. All the while you would be rewiring the neural pathways of your subconscious.
Why is it that the majority of newcomers to the market don’t see the need to go through such a process with respect to trading? Perhaps they are lead to believe that they already have the necessary neural wiring to successfully read, write and speak the language of the market? I say not!
If you don’t step into a process to change or transform, your current beliefs will simply continue to manifest themselves in the form of your current outcomes. And you know what outcomes you have been achieving with respect to trading! These will simply continue as before without any change. You will never be able to change your outcomes until you change the way that you think, feel, see and do. Ultimately, to be a successful trader you will need to be able to think, feel, see and do from the market’s perspective, not your perspective – to become empathetic with the market.
Learning new habits is all about burning new neural pathways in the brain. I like the “cornfield” analogy.
The first time you walk across a cornfield you have to force a route through the high corn. The second time – you can see the track you left the first time so its a bit easier to follow. The 3rd time you start to trample a wider pathway across the field. Thereafter it just gets easier and there is no need to consider a different route.
The theory is that once you’ve crossed the cornfield 30 times, that is repeated your new habit 30 times, the new neural pathway you’ve created becomes burned into your memory. If this theory is correct then we need to make 30 mechanical trades before we get to eliminate all emotional bias.
I’ve currently reached 18 and in truth – it is getting easier.
I am thankful that you’ve sent me this article on ” Application of Knowledge “. Coincidently my son has just given me a 12 months subscription of the Smart Investor and I like your Share Wealth System road-tested by Chris Wright. I absolutely want one. How can I get it and how much does it cost? I’m sure it will pay for itself in no time.
Kong Pin Goh
Gary I always learn something from each of your journals and look forward to receiving the next one. I do not think that one can ever learn all there is to know in investing and trading in the share market.
Well written indeed.