I have the honor to work with a student right now who is also a police officer in one of the largest cities in the world. He has a dangerous job. I in no way want in this post to compare the importance of the job of police officer with the importance of being a trader (one job saves lives, the other saves pips -- no comparison).
But here are some thoughts that I offered to my friend today, as he starts his journey to be a trader.
You are in a great position to accept any shift in thinking that is required for you to be successful at trading. I would not be surprised if your success in trading starts to have an effect on your perspective on the street as an officer. Trading well will shift the way you look at many, many things.
1. Do you ever wonder why a person who has done something wrong on the street doesn't want to admit it at first? Why don't they just come clean? I suspect that can be frustrating. Well, that bad dude is like a bad trader that won't admit they made a bad trade -- and so they just keep letting it get worse and worse.
2. Do you believe that work as an officer can be chaotic? But at the same time, you've pretty much seen it all? It's that strange dichotomy that exists in trading, too. The market is chaos, but once you dive in and start to understand the underlying patterns, there is not much that surprises you. Let me put it another way:
3. Do you feel that on a rough evening as an officer, you just have to "go with the flow," that to fight the negative stuff coming your way is just going to be counter-productive? Well, it's the same in trading. You don't fight the market. You put yourself in a position to stand back and take advantage of what comes your way, or you make sure that you stay out of the way of the bad stuff (this is where you have a choice in trading that you don't as an officer).
4. Would it be fair to say that the best officers understand the "mental" side, the "psychological" side of their jobs just as much as they are in good physical shape? They have both mental and physical strength? Well, it's the same for trading. You need the mental side AND the skill set. You can imagine that the dumbest guy who is in great shape can never be a police officer. Well, the dumbest guy with the greatest trading system in the world is not going to make any money. You can imagine, too, that there have been some great officers and detectives who were not necessarily Jack LaLane or Mr. Universe. Well, that's the same for the best traders: they have a valid mental perspective and that can compensate for the fact that they might not know some "secret" trading system, or some amazing skill.
Comments
Hi Rob,
Glad to hear about your new student. Police officers have one of the toughest jobs in the world. I wish him well in his trading efforts. I have found that most people can really give themselves an edge in their trading if they remember the traits that have served them well in their prior jobs.
Our new friend has several great skills the can transfer to their trading.
1. Looking at the whole picture - when encountering a situation on the job an officer has to try as quickly as possible to the get a sense of the larger picture of what is going on (larger time frames) before making a decision on his next course of action (entering a trade).
2. Making a decision based the best information possible at the scene and sticking with it (honoring your stop loss/accepting the results good or bad). After getting all of the facts officers MUST make a decision of some kind and go with it.
3. Understanding your enviornment. Officers often have to know something about the neighborhood they work in. Understanding the mental makeup of the residents gives the officer a bit of a heads-up about the needs and energy flow in an area. The energy in a drug infested neighborhood is vastly different than that of an upper middle class area. (understanding the behavior of the currency pair you are trading - does it swing wildy or coast in one direction with ease.)
4. Gathering information at a crime scene (are we in and up trend or a downtrend, are we near key decision points like support and resistance, pivot points, did price cross a major moving average?). Good trading requires some detective to get an idea of where you are in the market, how you got there and what you're going to do with the info. (trade or not trade a particular signal)
I could come up with many more examples but I think you get my drift. Learn how to apply your best NATURAL skills/traits to the market and you should do quite well. I can tell you that you will learn more about who you REALLY are faster by trading than by any other discipline I've personally come across. Be prepared for some surprises and enjoy the journey. Tell our new friend that we all wish him luck and that he has a world of support available to him.
Posted by: Louis Cooper | January 24, 2007 08:46 AM