When you were a toddler you looked up to and paid great attention to the big people. The big people were essentially anyone who was taller, older and could manage their environment in ways that rewarded them with getting what they wanted. You were fascinated with how the big people were so much more powerful than you. These folks included your parents, grandparents, siblings, babysitters and anyone else with whom you spent a fair amount of time. You followed their every move intently and you began to imitate them. You tracked how they walked, talked, moved and interacted. You picked up words and behaviors, some of which made your parents blush when you repeated them in public. You were learning how to “be” in the world.
These relationships were the beginning and formed the foundation of your education and socialization. No one had to tell you to pay attention, you were driven by a passionate desire to learn and do. This powerful curiosity drove your behavior. Through repetition, you began to form belief systems, biases, values and attitudes that to this day form the underpinnings of your conditioning and programming. This programming also forms the paradigms and mental models of the world that determine how you show up, interact and respond to environmental situations, which of course include trading. You were “modeling” your world as a tyke and this strategy is still a very powerful way to increase your trading efficiency and effectiveness.
Modeling or “behavior modeling” is drawn from social learning theory and can be described as the precise demonstration of a desired behavior. According to the theory, we learn not only by doing, but by watching what others do.1 In the same way you learned as a child, this strategy can be employed to turbo-charge your trading by first identifying a role model or mentor to use as the successful example to follow. The subject being modeled can also benefit by learning from feedback on how they structure their experience; just because someone does something well, doesn’t mean that they know how they do it.
You would begin by decoding the strategy that he or she used to plan and execute trades in a disciplined way thereby getting similar if not the same results; if someone can do it, anyone can learn it. Modeling is a way to meld curiosity along with a desire to listen to, watch, respect and learn from others as well yourself. Actually, curiosity is the lynch-pin of learning, and, next to possessing a passionate desire, sets the tenor and tone of achievement. Additionally, modeling is an interest in process over content. Process or the “how” something is done is arguably more important in this context than content or the “what.” The process is where skill is focused to create the end result. There are countless ways to do anything, some extremely effective ways and then there are time-and-energy wasters that might get you to the same result … eventually.
You can model anything as long as you identify the behavior components in someone who does that thing well. For instance, you can model motivation, trade planning, technical analysis, managing risk and persistence and perseverance. By the same token, you can model excellence in your ability to take unnecessary risks in your trades, violate rules, put on too much size, react impulsively and freeze in the face of fear. With conscious awareness you can choose to do something differently and break the cycle of continuing to do the same thing and expecting a different result.
You can also apply the modeling process to yourself by identifying a skill in another area of your life, breaking down the strategy and replicating it in your trading. For instance, you may be methodical, self-assured and cautious in another part of your life, but highly anxious, impulsive and unpredictable when it comes to trading. This is a common occurrence for many in the markets; and traders will tell you how their rules “went out the window” as soon as they felt the pain of a position going against them. Traders finding themselves in that situation often moved their stop, or doubled-down on losers, or violated rules in some other way. Uncovering strategies to be learned involves observing personal program(s) that are sequences of mental and behavioral codes, for instance, how you do what you do when you drive, play the piano, cook or any other skill. Normally you don’t think of how you do these things, but they constitute a code of behavior. The programs that make them happen are managed by your unconscious mind. These are known as strategies.
When you have the strategy for how someone manages his or her experience, you have the key to reproducing that experience. Trading has context specific patterns that produce excellence around things like planning, rule setting, money management, technical analysis and fundamental analysis among others.
There are also ancillary aims that indirectly support trading success. For instance, often really successful traders have a consistent pattern for giving back – a public mindedness which reminds them that they are a part of a larger community and this viewpoint helps them to remain grounded in the face of greed. Secondly, they have a larger heartfelt reason or purpose that establishes why they want success. Winning traders create a vision of success that produces a subconscious passion for remaining focused on crucial aspects of trading such as keeping rules and following their plan. These are but a few of the strategies and aims that are incorporated in many highly skilled and successful traders that modeling would reproduce.
Modeling, along with the other success oriented strategies helps you to identify, bring and keep your A-Game at your platform. In “Mastering the Mental Game” we teach you how to do that so you can resonate with what matters most while remaining in the now of the trade. Ask your Online Trading Academy representative for more information. Also, get my book From Pain to Profit: Secrets of the Peak Performance Traders.