If you need to be right before you move, you will never win. - Mike Ryan
The world is an utterly messy place and it leaves all of us behind being utterly confused. When I talk to people they say things like "I want to be a trader", or "I want to be an entrepreneur". And while those aspirations are admirable, the next thing they say is "how do I do that?". This post intents to explain "how you do that".
Without going into all the minute details here, we can all agree that traders basically make money by buying low and selling high, in some form or shape. In the same vein we can probably all agree that entrepreneurs make money by building something that the people out there want to pay for. Keeping it simple, those essential facts are all that matters.
I remember somebody wanting to be a trader so bad that he signed up to workshops and bought all kinds of "signals" that supposedly let him become successful at trading. We have all been in this place. Wanting to become something, and longing for guidance, looking for help. There are now a couple of fundamental flaws in this story. First of all, the sole purpose of any product out there is to being sold to you. And that makes you the consumer. It does not take much to realize that consumers, on average, do neither become traders nor entrepreneurs, if the consumer is your singular defining spirit animal. This might be a contagious opinion of mine, but if you find yourself purchasing your way into your career path, you will not get anywhere, if not lose it all. Now, we can acknowledge that there is usually the need for equipment. Let's say you need a personal computer to work in the digital world. Check. The second point I want to make here is that there are no tricks, no tools, no shortcuts that provide you with a particular form of edge in any of your endeavours. The reason for that is that anyone out there, that is your competition, has in fact access to all the same tricks, tools and shortcuts you have access to as well. So we find ourselves on a level playing field to begin with. And that means, it is really hard.
If you take anything away from this post, then let it be this. Traders trade. Builders build. Runners run. Writers write. Painters paint. And basketball players, that's right, play basketball. Because what you do is who you are, and when Ben says it, it must be true.
It is almost silly to spell it out like that, but I noticed that a lot of people need to hear this. When you want to become something, you need to do that thing that defines that very something in the most fundamental sense. All you have to do in order to become a trader, is to trade. All you have to do in order to become an entrepreneur is to build. The people playing in the NBA are not out there shopping for the right shoes to run faster or to jump higher. Shoes are not the make it or break it components of the craft, especially when you start out. If you want to become a basketball player, all you have to do is to play basketball. Nothing else. The same applies to all other mission statements. If you want to be a painter and you are stuck because you cannot find the appropriate canvas or paint or you don't know what to paint, then you will never become a painter. It is not in the equipment, but in the activity itself.
For that same reason one of the Christmas presents I gave away last Christmas was some average pen and paper notebook. And on the first sheet of paper I wrote "the power of the word does not come from pen and paper". The gift did not cost much. The material cost was meaningless. What I wanted to gift is inspiration and the understanding that all that matters is what you do with the little you have to your disposal. And that magic can only come from inside of you. Put differently, if you are externally motivated to become a trader because the good ones make so much money, then you are very likely to give up at some point on your way. The reason for this is usually that most people just want the pot of gold at the end of the rainbow, but what they do not want is to do the thing that is required to actually get there. Chamath said a thing that stuck with me ever since. He said something along the lines of, "if you really want to get to the top of the mountain, then you better like hiking". And I think most people neither do like hiking, nor understand what it takes to get to the top.
So, the only thing you have to do if you want to be a trader, is to make a trade already and not be paralyzed by indecision. Go and make a trade. And not just one, but many many trades over a long period of time. And no, you do not need money to learn how to trade in the first place. You do not need accounts on exchanges. You do not need to go through KYC processes, nor wait for SEPA transfers to clear. You do not need a solid trade execution foundation in order to minimize your cost model. You do not need to understand complicated traditional finance jargon if you are at the very beginning of your trading journey. All of those things come in time if you only do "the thing". You do not need anything more than pen and paper, if all you want and need is to learn how it is done.
Bear with me here please. Traders and capital allocators will confirm that journaling and writing generally helps them to be better at their craft, stay focused and organized. Writing is a form of thinking. And you are going to have to think a lot if you want to be a trader. Thinking is then not just the recycling of other peoples' ideas. Thinking is the process of articulating the underlying mechanics of the system that you want to conquer. In practice, here is how I would suggest you get started. Write down the current price of any asset you want to trade and write down whether this price is going to be higher or lower in one week from now. Additionally to that, write down why you think the price is likely to go in the direction that you chose. This is how you enter your first trade on paper. No money required, no nothing. The essence here is to write down your own thesis for the market in front of you, which is based on facts and reasons. After one week, you then validate your thesis and see how your hypothetical trade would have performed. That means, write down the exit price after your time window and see whether the price movement over the past week matches your initially chosen direction. There will be a simple yes or no answer staring back at you when you ask yourself whether your trade would have made money or not. In either case, your job now is to analyse why your thesis was in fact proven right or proven wrong, and whether your believes about the reasons for the predicted market behaviour have in fact been true to the best of your knowledge, or not. At this point you realize that trading is not about fancy signals or high performing machine learning models. The essence of trading is to assign probabilities to possible outcomes for the underlying fundamentals that you can reasonably well articulate. Because only what you can articulate well, you do really understand. Gut feelings are a luxury that only seasoned warriors can afford after being scarred countless times inside the arenas around the world. When you start out with anything you have to be brutally honest and awfully excplicit in your thinking and reasoning. And you have to write all of this down if you are being serious about your ambitions and about yourself. Any hand waving or glossing over what you consider unimportant details may turn out to come crushing down on you in no time.
The protocol described here can be adjusted in various ways. You can choose any asset, market and industry to trade in. You can play around with time scales and run multiple thought experiments in parallel if you have that capacity. And while your bets are running, you can use the time to educate yourself about the fundamentals of your bets and their underlying systems. The important part here is to create and maintain your own journal that keeps you honest and accountable. After a couple of months of consistent journaling you should either realize that you do not want to become a trader after all, or realize that you in fact have become better at what you are doing. Realizing what you do not want is valuable in and of itself, so do not be discouraged. Now you know and can take on another journey! That is exciting! If you on the other hand notice you have in fact a neck for trading like Cred or Jonah do, then you must clearly like the taste of your own blood and at this point you will make your way with godspeed, which does not require wasting any further words. We will pour one out for your broken soul.
While the example above outlined one potential strategy to approach the discipline of trading, we could define similar steps towards mastery for all the other professional fields as well. If you want to continue the conversation about such interesting dynamics I would love if you reach out as long as my availability permits.
Finally a bunch of caveats to preface our thinking here after the fact so we are not mistaken for handwaving fundamental intricacies away. If you are playing in the NBA then the shoes you wear are likely more than fashion statements. There are probably brand, marketing and maybe even miniscule performance implications to consider. That is ok if you are in fact playing basketball against the best of the best. The point I tried to make here is simply that the type of shoes you wear is mostly irrelevant if you are just at the very beginning of your desired basketball playing career. The type of shoes that you wear should not stand in the way of you playing basketball. You should even be able to play without shoes if you have to, which I would argue makes you a better basketball player than all the other people around you, because what you do at the edge of death is to realize your own potential to an extend that most of the other people out there are simply not willing to bring to bear. If you are driven by the sheer hunger inside of you, then that is something your competition is being utterly afraid of. Because nothing wants to stand in front of something, that is relentless. And when I say that all you have to do is to play basketball and nothing else, then I only want to highlight what is most important to begin with. If you want to make it big, then you will have to train and improve on all kinds of details along your way. And what is very important to understand is that you do not start with the details, because you do basically not know what you are doing when you just start out. And so once you are on your way in whatever direction, you will realize what matters and what you need to improve and train in particular. Just make sure you do not get it backwards like most people do looking inwards from the outside. The same line of thinking applies to all the other disciplines. Elite traders and capital allocators have tools and systems that enable them to do their job better at a higher level. Note the classification of elite. When you begin your journey then none of these fancy tools and systems apply to you, because you are frankly not elite at all, yet. Those fancy things are meaningless distractions if you want to learn the craft. And now stop being distracted and go do what you have to do.