The Turtle And The Trader:
The Journey of The Newbie Trader
A lot has been written about the Turtle Trader and many comparisons have been made about its technique, system and style.
I would like to take a turn at this because the basis of everything that I teach is all about the life of the humble turtle through the eyes of a trader.
The turtle is a creature that lives in danger all its life from the moment it is born. In fact, even before it is born, it is in danger of being eaten as an egg. If it survives that, the hatchling is in immediate danger of being buried alive from the moment it emerges from its egg. The tiny fella now has to dig its way out of the nest to get to fresh air.
This is a trader who has read a lot of material or has just graduated from a course and is loaded with so much new information that tends to overwhelm and confuse the trader. The trader will be disoriented, not knowing which way to go first or what to do immediately.
Such is the nature of the new trader, which is why it is necessary to paper trade first and put those newfound theories to the test on paper or virtual trades. The experience gained from virtual trades is akin to the turtle digging its way to the surface for its first breath of fresh air.
When the turtle gets to the surface and successfully avoids getting buried alive, the danger just gets worse. It looks around to see its siblings getting picked off by predators as they make their mad dash for the waterline. Dogs, birds and other predatory creatures make a quick meal of these vulnerable little turtles as they scurry down the beach for the waterline. Many do not make it.
The trader now has some experience and begins a foray into the real market with real money. One by one, friends and acquaintances get wiped out, lose faith, suffer confidence issues and become disillusioned. The trader now realizes that what happens in the market is a serious business where the weaker traders get killed, the stronger traders survive and only a few big players with years of experience actually get rich doing it.
Those turtles that make it to the waterline get little reprieve as the water now poses another danger due to larger predators in the form of predatory fish. Each little guy now has to swim for the deep and find safety in a reef or weeds.
Amidst the reef and weeds, our little turtle survives and grows. It takes many years for it to get bigger and stronger. Through all those years, the threat of death lurks all around from above, below, right, left, rear and front. It gains knowledge of its environment and the nature of everything around it. The longer it lives, the more experience it gains, and after a long while, it is big and tough enough that it no longer has any natural enemies in the water.
Preservation is the key to the trader’s survival now. One of the biggest challenges will be discipline. The novice trader’s sense of adventure will be the greatest threat to this discipline and the key to curbing that enthusiasm is patience – something that most people do not excel in. The want (and not the need) to trade is very tempting. This want tends to lead the trader to take on positions that are not properly researched on or planned for. The lure of the market is just too great to resist.
The trader needs to learn when to stay away from the market and when it is safe to participate. The trader has to learn when and why a trade is made, then know when and how to exit the trade before the risk gets too high. Most importantly, the trader has to realize the dangers that come with every venture into the market and know how to evade them and avoid getting killed by them.
If a trader does not first learn how to survive in the market, the trader will not thrive in the market.
But there remain a couple of constant threats for the grown and mature turtle in the form of humans and large sharks that kill indiscriminately and mercilessly for profit (the human) or by instinct (the shark).
The turtle’s journey through life is one that is fraught with constant threats of death as it lives its life to fulfill its one and only purpose on this planet — to reproduce and start a new cycle all over again.
The successful turtle will survive to breed many times over and produce more turtles to take their own fight into the wild and treacherous world of nature.
In spite of all the experience and the skills gained, the trader will always have that constant threat of failure. Complacency and over-confidence become the experienced trader’s main threat. The market always has one more trick up its sleeve when you think you have it beaten. It is its most sinister trick in its arsenal and it will play on your face, pride and ego. This will hurt the trader in more ways than just a financial loss.
Therefore, the trader has to constantly remain humble, disciplined and alert. This will be difficult as wealth and success has a way of lulling even the best traders into a sense of complacency.
Face will keep the trader from admitting that it was a bad trade. Pride will deny the trader from being honest about the error and learning from it. The trader will then use blame, find excuses and even complain to defend his ego instead of taking the lesson to better the experience. Finally, arrogance will keep the trader from recovering as the trader stoutly defends his face, pride and ego.
The humble trader, on the other hand, acknowledges that this is a long and arduous journey of learning and hard work with the never-ending task of building success upon success. The humble trader accepts that the journey never ends and the lessons never stop coming. It is only through patience and perseverance that one success will breed the next with the nagging reminder that failure only lurks around the next corner.
What are you prepared to do in order to survive?
Get back to the basics, dispel the myths about this business and adopt the right mindset, disciplines and practices that make a good trader. You will find that a lot of what we think we know in fact, tends to work against us and some of the things we learned tend to conflict with what comes naturally. Your objective is to align yourself with common sense and natural tendencies again instead of becoming a victim to market noise.
Be a turtle … focus on what is real and practice what it takes to survive.
This article was featured in the National Best-Selling Book, “Winning Psychology Of Defensive Traders“
Copyright © Pattern Trader™ by Conrad Alvin Lim. All Rights Reserved
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He is known for his unique and simplified blend of Macroeconomics and Financial Management for his Defensive and Psychological approach to trading and is sought after for his intimate knowledge of Macroeconomics, Sector Rotation, Defensive Analysis, Financial Psychology and short-term trading techniques.
To find out more, visit www.financialscents.com
