Readers know that I like to illustrate principles by telling a story, oftentimes of other traders. However, today I have an account that deals directly with me.
I’ll Admit I Was A “Know It All”
When I was working on my master’s thesis I was assigned a pair of supervisors. Like most traders, I have a very independent personality and didn’t care much for academic supervision. As I continued my thesis preparation, I wanted to quit every single week. The reason was that I did not get along with my supervisors. Seriously, I thought I knew everything, and that these men frankly did not understand my deep intellectual thought.
Fast forward a year later, by the end of my research, I realized that I could not have done it without them. Undoubtedly, the critique my supervisors offered me, which I resisted heavily for the first three months, was invaluable in transforming me from a “know it all” into a legitimate researcher and writer. Now that I am completing a Ph.D. program and working on my dissertation, I was hoping to find the most critical supervisor available. To my disappointment, I have not needed as much critique as I expected.
The point is, while I was initially reluctant to receive crucial feedback, I understood how vital it was to my personal and professional growth, as I saw the long-term benefits as I improved in many ways.
People tend to be resistant to feedback; it’s part of human nature. We feel defensive around others. Traders are more prone to these personality traits than many other demographics. Think about it; traders tend to have an entrepreneurial spirit; therefore, we enjoy working independently of supervision. I once knew a desk manager for a large institutional bank; he ran their most profitable trading desk in that department; however, his only gripe was that he had to be supervised.
Furthermore, being traders, we have to develop assertive skills, quick thinking, coming to reliable conclusions that we have confidence in. Therefore, these skills overlap with the rest of life, and many times we do not like to hear that we are wrong.
You Can't Escape Criticism
The question I pose in this article is, how well do you receive feedback? Feedback is essential for life growth; whether we are researching an academic project, trading, or in a committed relationship with a significant other, receiving feedback is a crucial life skill.
We are fortunate when feedback comes in healthy, positive ways. As hard as it is, a gentle tone usually helps us absorb and respond in a better way. However, we know that many times, feedback comes in unhealthy, harmful methods. It’s at times like this that we are usually most resistant.
However, there is truth to be found in all feedback, whether it is positive or negative, presented in a healthy or unhealthy way. Even when feedback is wrong, it is still helpful. For instance, if we are misunderstood, then we might consider ways to communicate better going forward. For me, I look at the responses to these articles, why, because it helps me gauge how well I am connecting, even when folks disagree with me.
Feedback Encourages Growth
As traders, we are often alone. Furthermore, it is hard to find others to trust. There are social networking opportunities, but how much are we able to trust these strangers. If you have a chance to network with someone you can have confidence in, you have found a valuable asset you should take advantage of.
The deeper reality is that we receive feedback every single day by way of our account statements. One thing we know is that balances don’t lie. However, I have seen traders rationalize and avoid these mathematical facts. I’ve done it myself.
I’ve seen this so much in the last few years. Take, for example, the stock indexes like the S&P 500. There are what we call permabulls and permabears. Some only seem to see one side of the market. Unfortunately, while these markets continue to climb, I’ve seen bears time and again get crushed, believing markets should only go down, they refuse to take the critical feedback that the market was giving them every day.
Any of us can be trapped in this thinking because we don’t like to admit we are wrong. These traps are also why some traders are prone to using stop-loss orders that are too wide or widening perfectly appropriate stops because getting stopped out is a signal that we are wrong.
When the markets are giving us critical feedback, do we pay attention and quickly receive that advice? Or do we tell ourselves that we are correct, it’s the market that’s wrong? Either way, account statements don’t lie!
This is why an in-depth analysis of your trading history is paramount to success. You can chart and detect your patterns; the times of day that you tend to be most successful or less so, or the kinds of trading environments such as high or low volatility where you tend to do better and so forth.
We have plenty of opportunities for feedback with each trade that we make, we only need to pay attention to them. Happy trading to you all!