I surmise both Kahneman and Taleb would argue, that Sullenberger was lucky! True, but that simply does not cut it! Luck had nothing to do with the fact that all passengers and crew survived. This was formidable skill at the very pinnacle of human capacity! Another less experienced pilot would, more probably, have gotten them all killed.

So, where does this leave us as traders? First, if you think for a second that you could dream up a formula that will quickly double your recent funds from auntie’s 500.000 dollar inheritance in a matter of weeks, or even in a year. Try golf, you’ll be better off – or at least have more fun spraying the dough! If you’re not committed enough to put your back into real hard work to learn the skills of trading, you will never survive, nor will a pilot or an athlete in their ‘offices’.

Here is why. As slim as the margins are in an Olympic 400 m sprint, as minute are the differences in success or failure in entering a bid or ask contract in the markets, on the right side! It is even harder getting out once you found out that it was indeed on the wrong side. Worse, still, keeping the winners going if you were on the right side of the trade!

So, would you like learn to swim – get wet! Would you like to challenge your mind in swimming across the English Channel, get wetter, for longer durations in the water, and start registering how your fears and blocks appear in your mind while, when you’re mature for it, swimming a mile right into the ocean and then back! Of the skilled mountaineers that attempt Everest, most return, of those who are less skilled, large parts are eternally enjoying the grand views of the Himalayans. Take your pick; it is not different with trading skills, maybe even more difficult.

Apart from learning about the markets you will sooner or later have to expose yourself to the toughest introspective tribunal of your own wants, inconsistencies, fears, triumphs, mind-boggles or even shear black-outs and mind-freezes in being, simply a limited and biased decision making human. As indeed, we all are. Some of us, who have the guts to admit these psychological shortcomings on a daily basis; which – incidentally – I myself have had serious trouble with; and use them as an investigative tool in all sorts of queries, will succeed faster.

But, bear with me, there is solace still to come!

Since the market changes all the time and may statistically be defined as ‘a low validity environment’, the matter of ‘skill’ seems to be a matter of circular reference, since skill require some form of “regular environment”. However, the market is highly regular, in certain time frames – that is. The difficulty is learning about the limits of its regularity and the – often timely – seizure of it. For pending irregularities, there are signals, easily missed or misinterpreted by the – not yet – so skilled eye, or, by shear ignorance. But – it can be mastered!

Furthermore, humility – is one of the keys. In my trading I had to endure the hardships of becoming risk averse, because I am a born entrepreneur, being naturally risk prone. So, skill is needed – and amidst skill learning – you need to learn and control how your mind makes biased unattended decisions for you, that have to be avoided. That is, embracing negative feedback.

Try picking up a pencil – as a metaphor. Easy enough, but what you’re probably not aware of is that while picking up that pencil, your senses make several dozens of negative feedback inhibitions, telling you where not to go, in order to arrive at the pencil. Trading is the same. It is to a larger extent learning what not to do. The temptations are infinite.

In the next article I will elaborate around the psychological mechanisms governing risk aversion and risk seeking and the reasons why our mind goes into a mind freeze in certain situations and how it can be trained to be avoided.
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