On the road, every participant has a different destination in mind. Be they lengthy or relatively short distances, usually everyone is trying to get where they are going as fast as possible.
The ironic parallel I find in trading and Driving is that, both the people in the biggest hurries and those who are afraid to drive, tend to be the ones that cause the most problems.
As I was pondering the dynamics of a traffic jam I thought to myself...
"How many times have you been in a jam trying to keep a safe stopping distance from the person in front of you only to watch the hurried driver next to you see it as nothing but an opportunity to move towards their destination even faster?" I see it constantly, as if it were the rule of the road rather than the insanity it is.
The thing I learned long ago, is that switching lanes in stop-and-go traffic rarely increases the speed at which you arrive, and "It" (The greed) is actually the cause of the traffic jam itself.
Every time a buffer zone is depleted by an encroaching hurried driver, it causes a tidal wave of braking by the cars behind them, thus depleting the buffer zones of everyone behind them as well. I believe that is the sole cause for stop and go traffic. If there ever was a human centipede, that's it.
The reason I abandoned lane switching for the most part is because I realized that every gap that showed up was quickly filled. From the vantage point of a Semi you can look far, far down the road and see it all equaling out for the most part. After I abandoned lane switching I would laugh as I came to pass a car that had earlier on switched lanes for the quick gain they assumed they were making. Nowadays I almost always crack up watching someone zoom in to the opening in front of me... Where are you going to go dude? What are you going to do, save 20 seconds if you're lucky?
At the heart of every traffic jam is the psychological fixation upon ones own need to arrive as quickly as possible to the destination. It is both the cause and the perpetuation. Yes there are certainly moments where this mentality is not demonstrated by every driver, but it is rampant enough to cause the jam every time. Even when the reason for the jam is some distraction on the other side of the road.
Few seem to see that it's literally the difference between everyone scrambling for the door during a fire, and everyone walking in a calm single file line to safety. The bottleneck is always caused by blinding focus on self needs, which ultimately cause a jam in the system. That desperation actually diminishes any additional returns sought out initially and often to the point of Negative returns.
How many times have you seen a merge warning well in advance of a closed construction lane, only to see drivers stay in that lane until the last possible moment? It causes every one who has already merged into that lane to slow down!
So what does this have to do with trading? As I said before, every participant has a destination in mind. I imagine that most have some lofty final destination of "millions of dollars" that guides a more immediate destination of "make X Dollars today", but regardless it's all about getting to the end. And in trading the more rushed you are to get to the end the more likely you are to do yourself a disservice and unintentionally slow your own progress.
There are so many facets that align between driving and trading I could spend hours on it, but what I want to stress is the understanding that greed and impatience cause us the very "stop-and-go" performance we lament.
As much as I would love to see the roads run smoother due to emotionless, computer controlled cars, I have to say I am glad there are living breathing emotional people driving the motor of the markets. If it weren't for them I can't help but imagine us having very little opportunity to profit from.
So to tie it all up, What can be done to ease the traffic jam of our trading journey? First and foremost drill it into your head that hurrying will only cause problems. You have to believe that first. Without truly believing that, we will continually impede ourselves with detrimental practices.
With time and conscious experience along your journey, you will eventually come to discern when the opportunities to put the pedal down are present. You will see that they arrive in conjunction with the margin of safety that makes it productive to do so.
Sadly, as a truck driver I see the worst of the worst on the road. And because this world does not operate in a way that makes much sense, the barrier for entry on the roads is far too low, resulting in a lot of life changing events for people. As with driving, the barrier for entry into trading is very low and far too many people who should not be trading are.
I find myself asking if I am one of them at times. Thankfully, I also look back at all the growing I've done and realize that I know a lot of parents who ask themselves if they are doing the right thing with their children. I often find that the ones asking that question tend to be the only ones actually doing it fairly well.
-Francisco
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