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Applied Life Experience to Trading
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Applied Life Experience to Trading

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Market Wizard
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Applied Life Experience to Trading

There are many parallel life experiences that can be directly applied to trading. It all boils down to applying what you know and what works to really make it as a trader. Yes, you need a setup, an edge, and money management to trade successfully, but at the end you have to make a decision based on your experience with similar situations to initiate a trade, stay in the trade, or to bailout. That is a dynamic decision making process that cannot be programmed into an indicator or consistently be part of a trading plan. However, it is based on experience and a learned process. Many of the celebrated authors did not really invent or originate books like Trading in the Zone, the Seven Habits of Highly Successful People (Traders), etc.; they merely collected what is available from old wisdom and put it in a book to read.

Real life is full of examples. Take for example course management in playing Golf. We all know the probability of ending up in a bunker is high when the green is marginally reachable. Yet, we go for the green. The professional guy will lay up and most likely will chip close to the pin for a par or even a birdie. Not like most traders that go for a hole-in-one every time. We need to draw on those parallel experiences.

Here is a good one. Many years ago as a nuclear engineer, I used to commute to work for about four years from Vienna, VA to Washington D. C. taking the Metro in the morning and back in the afternoon. There was this fellow at the metro station selling roses to the commuters. I would see him every day early in the morning and the late afternoon when I return. I bought roses from him a couple of times in the afternoon to take home. One day I asked him it’s amazing that you have these roses all day and they are still real fresh. He said I only stay here a couple of hours in the morning and another two hours in the evening, and I go home in between. He continued, people buy roses for their secretary or girl friends when they go to work and buy them for their wives in the evening so that they can keep their girlfriends, and that is when I do most of my sales.

Well, with the advent of 24 hours trading, do you want to stare at the computer 24 hours a day or pick trades at the most opportune times of the day?

So, get your setup and use whatever parallels you know best and you will do fine. An old friend of mine beats 90% of all mutual funds by using a simple 10 and 50 day moving average plus a lot of common sense.


Last edited by aligator; February 7th, 2011 at 08:18 PM.
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I've noticed some big changes in how I deal with certain things in my life over the past few years as I became a full-time trader. I started realizing that I am not always right, for one, even when I am convinced I am, in fact, right -- often times I am not. I learned this directly through my trading experiences, it gave me a new appreciation for how the mind works and selective memory.

I also find myself being able to really separate myself from certain situations and take a step back and analyze things, where before I would maybe get caught up in the heat of the moment if there was an argument in the family, etc. I've learned this from my trading as well. Being able to take a step back and take a wider look at the available data.

One of the biggest changes is in my own psychology, if you will. From all the psychology books I read on trading, and from my own direct experiences, I've found that I really understand psychology itself much better than I used to. And this can be applied in so many ways in life outside of trading, it is a welcome improvement to be able to somehow have this "extra knowledge" that I didn't have before.

Mike

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