Wednesday, August 29, 2007

Thoughts On Trading, Discipline, and Integrity

Pondering this piece of wisdom from, I began to contemplate:

* Websites, seminar providers, and software developers who tout their trading products and services with no objective evidence of their value;

* Brokerage houses that create endlessly inventive ways to make it easier for people to trade, knowing full well that the vast majority will lose their money within a year;

* Management coaches who have never managed businesses; trading coaches who don't trade; life coaches who, to all appearances, are mediocrities in their personal and professional lives;

Good physicians make a referrals if they believe that they cannot provide needed care for a patient. How many vendors of trading products and services would make a referral for people who don't really need their products? How many coaches? How many brokerage houses?

How much self-deception is necessary for such people to justify their life work? How much integrity must they sacrifice to willingly offer such garbage to the public?

And it's not just in the trading world. There are people who justify selling tainted toothpaste to the public and who rationalize the destruction caused by their own pollution. There are those who throw integrity to the winds to support dictators in support of their own self-interests, even as they profess a love of freedom elsewhere. There are leaders who squelch freedom of expression and choice with the deceptive rationale of protecting national security or social order.
And how about those smaller, day-to-day compromises? Cheating the diet. Spending the money we should be saving. Mistreating those who depend on us. Taking the easy way out. Perhaps integrity dies the death of a thousand cuts.

I recently heard from a person who worked for a dishonest firm. He knew the business took advantage of customers, but could not change the owner's ways. Now the firm was in legal jeopardy and shutting down. My acquaintance wanted me to provide a reference so that he could get a new job. A reference?? All I wanted was to ask him was how he could willingly suspend his judgment and work for a firm that actively hurt people.

But violations of integrity are everywhere you look:

* You know the family can't pay off the mortgage you're selling them, but you need to make quota.

* You know that the system you're selling is curve-fit, but you can't make money in the markets any other way.

* You know your soldiers have inadequate support, but you send them into battle anyway.

And in those smaller, day-to-day ways, we cheerfully go through life, chip, chip, chipping away at what's left of our integrity. We postpone and procrastinate. We don't make that extra effort. Perhaps worst of all, we live life without outrage, without confrontation.

And then, one day, we open our eyes a bit.

We ask the trading psychologist why it is that we cannot stick to the plans we've made, why we aren't faithful to our own intentions.

What can the psychologist say?

After the habit patterns and psychological toll of a thousand cuts, how could we possibly expect to muster fidelity to purpose?

Trading discipline begins with personal discipline. And personal discipline begins with integrity--and doing the right thing even with the little things.