Trading Psychology : The 4 Keys to Learning Anything

Trading is often about how to take the appropriate risk without exposing yourself to very human flaws.
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Wed Aug 02, 2017 8:12 pm


I’ve been studying how to learn, as I try to teach myself new skills … and absolutely love learning new things. But I keep running up against a few key problems:

Becoming overwhelmed. The more you learn, the more you see there is to learn. The beginner doesn’t know how much there is to study, but as you start to explore, you find new caverns, and they are immense. Then as you explore those caverns, you find even bigger ones. It can become overwhelming, and lots of people eventually give up because of this feeling.

Failure feels bad. If you want to learn to play chess, you’ll lose a lot at first. Then you get better, and lose a lot. In fact, no matter how good you get, you’ll probably lose a bunch of times. This happens not just with games, but with learning languages, physical skills, academic subjects — you’ll fail a lot. There are ways to set it up so that you rarely fail, but then you’re not really learning much.

It can feel like you’re just treading water. In a fantasy world, you’d learn at a breakneck pace, downloading new skills and knowledge into your brain like they do in the Matrix. Unfortunately, it doesn’t work like that. You read and read, or practice and practice, and a lot of the time you barely get better. Other people seem to be learning at twice your speed! Sometimes it seems like you’re not learning anything. This can be really discouraging.

There’s always a strong feeling of uncertainty. Humans don’t like the feeling of uncertainty, for the most part. We avoid it, become afraid of it, get angry or frustrated. But when you try to learn a new skill, it’s almost all uncertainty. You constantly forget things, you don’t understand anything, or when you think you do understand, you try it and it turns out you didn’t understand at all. This feeling of uncertainty causes a lot of people to give up.

OK, so we all want to learn skills — new languages, programming skills, physical skills, history, math, writing, games, so much more. But these four problems stand in our way.

Let’s take them on. We’re going to discover four keys to overcoming these four problems, so that we can tackle anything we want to learn.

First Key: Small Focuses

Yes, it’s true: there’s a vast amount of things to learn, and it can be overwhelming. But that’s true of life itself — there’s so much to see and do, and no one can ever do it all. All we can do is one step at a time.

So we have to not focus on all the innumerable huge caverns that have yet to be explored … but the ground right in front of us.

What small area can we study right now?

What small focus can we conquer? What little area can we explore?

Ignore all the vast uncharted territories for now, shut the rest of the world out, and just be in this one place. Just study this one thing. One small step at a time, a few small steps each day, and we can explore a lot over time.

Second Key: Flip Failure on Its Head

Did you all see the video of Deepmind’s AI after it taught itself to walk? The amazing thing about this is that it did all of that through trial and error. Every single mistake was a lesson.

In fact, that’s similar to how we learn. We don’t know that our knowledge is wrong until we test it out and see whether it works. We can’t truly learn something new until we try and fail a bunch of times.

We all learned to walk that way … wobbly, falling down, until we got the hang of it. That’s also how we learned to talk, to feed ourselves with a spoon, etc. Sure, we had the benefit of being able to see examples of doing it right, but we had to try and fail a whole lot of times before we got it.

Unfortunately, at some point we start to fear failure, but that fear is just holding us back. Failure is really the learning process. Every loss at chess, every falling down when we’re learning a backflip … those are lessons.

So instead of looking at failure as “bad,” we have to flip it on its head. Failure is a lesson, an opportunity to get better, a wise old teacher telling us where we need to focus our learning efforts.

When you fail, smile and say thank you for the lesson.

Third Key: Find Enjoyment in the Process

It’s a tough thing when we feel we’re not making progress, that things are moving too slowly. We want to get to expert level (or at least “advanced beginner”) as quickly as we can, and when it takes five times as long, we can get frustrated.

The answer is to forget about the pace of our progress, but just focus on enjoying the process of learning.

It’s like when you go on a hike, and you’re fixed on getting to your beautiful destination … but it’s a long journey, and you get frustrated by how long it’s taking. Instead, focusing on the journey itself is a better way of traveling. Enjoy the scenery, the exertion, the beauty of each step.

When we’re learning, instead of focusing on where we want to be, we can enjoy the particular focus we’re studying right now. We can be grateful for where we are, for having the opportunity to learn at all. We can enjoy the falling down, and any progress we’ve made so far.

Whenever we find ourselves wishing things were moving faster, that’s a good sign to change focus to where we are.

Fourth Key: Learn to Relish Uncertainty

I think the uncertainty of learning something new, of being in such a foreign place, is probably the most difficult thing. We don’t like that uncertainty, and we usually shy away from it.

With conscious practice, we can change our feeling about uncertainty. We can start to find the joy in this place of not knowing, of not being in complete control, of not having solid ground under our feet. That might sound weird, but it’s possible.

Let’s take a few examples:

You’re learning to play Go, and you are playing your first few games. You keep losing, you don’t have any idea where you should play, you worry that every stone you place is a big mistake. This is a place of uncertainty. Can you enjoy this process of trying something and not knowing how it will turn out? Be curious about what might happen when you play your moves? See it as an exciting opportunity to experiment, to explore, to play and have fun!

When you’re learning a language, you might be deeply afraid of speaking, because you don’t know what you’re doing (uncertainty). But if you don’t speak, you’ll never learn. So instead of fearing this uncertainty, you dive in and make a complete fool of yourself. Better to be a fool who’s learning than the chicken who doesn’t learn anything new. It’s like dancing wildly with random moves in the middle of a crowd … just have fun being silly! You can do the same thing with speaking a new language — try it, look foolish, enjoy this place of wild abandon.

When you’re learning to play music, you can get stuck on the certainty of learning songs from sheet music, because it’s easy to just follow pre-written instructions. But you don’t really learn until you put the sheet music away and try to play the song on your own. And you really learn when you try to play without following someone else’s pre-written music — just playing your own song, riffing and making it up as you play. Of course it’s much more uncertain, and will probably suck. But so what? Just have fun and make stuff up. Relish this place of creation and uncertainty.

So uncertainty can be enjoyed if we think of it as play. If we think of it as creation, learning, exploration, curiosity, finding out, experimenting, openness and newness. It’s courage.

Be courageous today, and put yourself in a place of uncertainty. And then let your heart fill up with the freedom of not knowing and flying without a plan.

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Wed Aug 02, 2017 8:23 pm

A great read, cheers Pete :)

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Wed Aug 02, 2017 9:22 pm

Yes a good read, but a little wishy-washy. I have a few issues with enjoying the process. I think I have said on here before that no-one should enjoy losing money, and no-one should happily lose money on a daily basis, just because they have been told that this is the cost of learning. Humans are wired to be self-critical for a reason. Negative emotions such as frustration and anger can be very powerful tools in the learning process. I know from experience, now, that continuing trading when we feel disgusted with ourselves (having made a habitual mistake again) can be disastrous. But if you can step back for a race, an hour or a day, and feel the frustration and anger, these can be the very emotions that improve your performance when you start trading again.

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Thu Aug 03, 2017 7:03 am

very good and very relevant thank you for sharing
Take the best from the best you meet then add on your skills and you will only improve in what you do

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Thu Aug 03, 2017 11:55 pm

JPK65 wrote:
Wed Aug 02, 2017 9:22 pm
I think I have said on here before that no-one should enjoy losing money, and no-one should happily lose money on a daily basis, just because they have been told that this is the cost of learning.
What about uni students?

Potentially losing money everyday - at an exponential rate - for the next 30yrs. Us traders have it well easy when ya think about it like that

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Sat Aug 05, 2017 5:53 pm

Hi ruthless, I have just done a stint in university, and I agree that modern higher education is just a money making scam, but, unless you are a total fool, you get a piece of paper at the end of you studies which can enhance your earning potential for the rest of your life. I would argue that if you are just happily losing money from day to day, when you are trading, you are not learning anything. You are just amassing bad habits which will ensure that you are a loser in the long term. If losing money hurts, and you are fighting to turn things around as quickly as possible, only then can you really start learning.

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Sat Aug 05, 2017 6:51 pm

JPK65 wrote:
Sat Aug 05, 2017 5:53 pm
I would argue that if you are just happily losing money from day to day, when you are trading, you are not learning anything. You are just amassing bad habits which will ensure that you are a loser in the long term
That's why keeping a journal & recording your trades is so important - both the wins & the losses. Also, so long as you're careful & do the odd decent sized live trade semi-regularly - practise mode can be used almost indefinitely

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Sun Aug 06, 2017 11:05 am

from personal experience I think learning to trade professionally is akin to studying at university. You've found something, (a subject) that you're interested in & look into in a bit more detail. You try it, find yourself wanting to learn more & then you imagine what to would take to make a living out what you've learned about this subject.

It's what I say where I currently work, from time to time I get asked about what I did on my day off.. I say I studied, when they ask "what in?", I reply professional sports trading & that I've attended a course & currently studying what I've leant on the course..and that I'm getting better & better every time I study, it's quite amusing as every time (whoever has asked, both male & female) find it interesting & want to know more, when I try to explain in the most simplest of laymans terms I hear "that sounds complicated", then I reply with it's like financial stocks & shares trading on sports markets, they then say, "you can do that.. how?", makes me chuckle every time.

Great post Peter by the way, hopefully it will aspire others.

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Wed Mar 07, 2018 11:39 am

Hi all. Stumbled on this and it really reasonated with me. I played online poker a lot in its heyday - but it always frustrated me that while I was décent - I never could find the method to study the game and improve. The caverns analogy is exactly how I felt.

Now I’m trying trading and it’s the same thing, I read the forum, I tinker with automation, I scalp, I swing trade, I watch all of Peters videos at random. I wander from cavern to cavern and never really just focus on one. I feel like I don’t know how to focus on one - or even which one to focus on.

Anyway great food for thought. I like Leo’s writing. Applying it is harder!

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