Keeping an Open Mind

Posted by Rick J. Ratchford

Do you have an open mind? When ideas and concepts differ from what you currently accept as fact, do you quickly dismiss them? If so, then this is likely to prevent you from learning that which you need to know.

To be successful in trading requires having an open mind. There is no single right approach to trading. There is only what we believe to be right or wrong.

Take for example a seminar dealing with a specific approach to trading. If just half of the people attending such a seminar actually learn a great deal that benefits their trading, what can be said about the half that did not? If you were to ask them, would they not point to the seminar’s material as being at fault or valueless? Most likely they would.

However, if this truly was the case, then how would you explain the other half that actually benefited from the material presented? Again, if you asked the half that did not, some may reply that it wasn’t the material at all, but that those people did it all themselves. This would be true to the point that they effectively utilized what they have learned to some degree that had a positive affect on their trading. If they weren’t doing as well until after receiving the training, then of course this fact should not be ignored. So what about the half that did not?

Quite possibly, they have their own ideas about trading and are not open to suggestions that require some degree of change from their current beliefs. Without an open mind, the door to wonderful possibilities and trading success may never be opened. Therefore, if a trader currently falls short of their ideal of success in trading, then it becomes essential that the trader realize that change is required if to improve. To change requires modifying ones beliefs.

My trading concepts are my beliefs. Everything you’ve been taught and believe to be fact is your belief. What is a fact? It is simply something that depends on some assumptions and your perspective, all based on your current beliefs. If you don’t agree with the assumptions and perspective another is using to prove something a fact, then at the moment it may not be a fact to you. Obviously then, it would be to your benefit as a trader to be more flexible and open minded, accepting that facts are based on beliefs that can be changed, thus changing the reality we see ourselves in. What is fact, my belief, is that we each see reality differently. Why? Because our beliefs are different, thus our outlook on life is different, our opinion about books, movies, people and so forth are different. It is the same book, movie, and people, but we ‘see’ things differently although the subject matter is the same. That a God exists is a fact for millions, as well as there not being one. Yes, there are some obvious facts that most can agree on, such as water being very important to sustain life. Yet, we may differ on what degree such importance has on human life. Once we understand this about the connection of facts and our beliefs, and accept it, we can then start to open our minds to possibilities we previously shut our minds to.

When something differs from what we hold to be fact, instead of just dismissing it or ridiculing those who find value in it, consider if there is any chance that this information may prove to be a valuable belief to have. By asking yourself this every time you come across information that is not part of your belief model, you may find yourself open to new ideas and concepts that start to enhance your understanding of the markets and trading.

Closed-minded individuals consider what they ‘believe’ to be facts. That is why it is hard for them to ‘see’ the markets in its various forms. Ever known a rigid long-term trader that can’t see the trees within the forest? The short-term trader who sees the trend moving down in a market that has been appreciating more than 10% a year? Our perspectives are based on our beliefs. If in reality we are not satisfied with our trading results, which is based on our current beliefs, then such beliefs must change if we are to alter our perspective and improve our reality. Change requires we alter our beliefs, which requires that we be open-minded to allow this to happen.

There are many excellent books on trading. Each book differs from another, because the others perspectives are different. An excellent example of this is the book called Market Wizards. The traders interviewed are considered by many to be successful (this is again their perspective or opinions), yet their viewpoints in trading all differ. What lesson can be learned from this? That there is more than one way to skin a cat (to all animal lovers, this is just a metaphor).

I’ve written several articles dealing with the psychology of trading. Obviously, it is my belief that the subject is very important if we want to do well in the markets. My beliefs about the psychology of trading is molded by the many works I’ve read on the subject over the years from people I consider more qualified than I am. If my mind were not open to this, much in the way of valuable advice would have been lost on me. Many mistakes would have been repeated (still repeat a few of course), and my perspectives about the market would be extremely narrow and counter-productive.

“A man without an open mind is likened to a car in snow without tire chains.”

What do you currently believe about trading and the markets? Write them down. What are your objectives in trading? Write those down. Do you believe that your current beliefs are fulfilling your objectives? Be honest with yourself. Doing otherwise will only hurt you and nobody else.

Determine what kind of trader you want to be. Determine what kind of trader you currently are. What is your current preferred time frame for trading? Does it feel natural to you? In other words, are you trying to trade long term while the pressure within you wants to trade everyday? Or are you trying to trade everyday when you know that a longer-term approach would be less stressful for you? Only you can answer these questions. Be open to the answers your mind is likely to provide you.

Just as long-term trading is not necessarily better than short-term, and vice-versa, there isn’t one method or approach to trading that is better for everyone over another. Keep in mind that if half a classroom of individuals is able to improve their trading from the information they received, just because the other half fails to ‘see’ what they see does not make it worthless or invaluable. The next time you feel yourself becoming critical of another’s approach or beliefs about the markets, ask yourself if it appears to be valuable to some others. This single point alone holds out knowledge that the world around is much bigger than we might be allowing ourselves to believe. Have an open-mind to viewpoints of others, which will help you reach your trading goals that much sooner.

Good trading all.