Two Things A Monkey Can Teach You About Trading

By Charlie Bathgate Psychology

By Charlie Bathgate

There’s a famous animal study conducted by social scientist Frans de Waal that has serious insight for your trading.

Basically, de Waal taught monkeys to use stones as currency. When the monkey gave the trainer a stone, it would receive a slice of cucumber. The monkeys were stoked. I give you a rock and you give me good food? I’ll take this trade all day.

But then de Waal threw them a curveball: he started giving some of the monkeys, but not all, a fat juicy grape instead of a cucumber… and the monkeys that received the cucumber got pissed.

That same cucumber that seemed like such a great deal lost it’s value once the monkeys compared themselves to the ones that got the grape. They went from happily accepting the vegetable to throwing it back at the researchers’ faces.

I don’t think I need to convince you that this hardwired tendency to compare ourselves to others extends to humans as well.

Twitter. Chat with Traders. Market Wizards. The trader at the desk next to you. Even The Steamroom.

For traders, the world is rife with opportunities to analyze how someone else is doing and judge one’s self in comparison. And nearly every time, the comparison is to someone that you perceive to be more successful than you are… not to one of the millions of individuals out there struggling or losing money.

As de Waal’s study shows, this isn’t an instinct we can let run wild without expecting it to screw us up.

But how do you learn from others without comparing yourself to them? One of the best ways to learn how to trade is to watch what others do, learn from their experience, and then adapt it to your own approach to the markets. That’s one of the primary reasons we created The Steamroom and the Master Course, and why they’ve been successful in helping so many traders in our community.

So, if we’ve got this natural instinct, how can we learn from others and exist in a world full of tempting comparisons without feeling pissed off or “less than” all day, every day?

There’s essentially two ways to solve this problem.

1. Leverage it with a rivalry.

While comparing yourself to random strangers seems to detract from performance, comparing ourselves to a rival can be an amazing way to convert this natural instinct into fuel for growth.

Just look at musicians or athletes. Larry Bird and Magic Johnson’s rivalry motivated them to push themselves harder than they ever would have been able to if they weren’t benchmarking themselves against the other guy. As a result, they literally redefined the NBA. They constantly compared their performances, and when they were on the court together, they pushed one another to do things we literally thought were impossible.

They key distinction is the difference between focusing on the individual rival vs. arbitrarily selecting new strangers everyday. For this to work, you can’t bounce from rival to rival everyday. This has to be someone that you consistently benchmark yourself against, that you know more about than other people, and that you identify as being a worthy competitor.

And a rivalry doesn’t mean you wake up each morning throwing knives at a poster of the guy’s head. Going back to Magic and Bird, yes, they had an off-the-charts drive to kick one another’s ass, but they still respected the hell out of each other and maintained a very close friendship off the court. They didn’t let the rivalry consume them. They leveraged it as a source of focus and drive.

It might just be time to find yourself a trading rival

2. Do it less.

Even if you have a rival, you’ll still have a tendency to compare yourself to strangers. And the problem with comparing ourselves to strangers is that all we’re doing is making up our own stories; we literally don’t know a damn thing about these people.

I’m reminded of a piece of advice from a mentor of mine: “You have no business in other people’s heads”. That means that you have no idea what’s going on in someone else’s life, and therefore the stories you tell yourself based on your perception of them are baseless.

That guy that you see walking into the prop firm down the hall with swagger befitting a pick up artist? He could have just declared bankruptcy and cried himself to sleep the night before.

Even the people that you think you might know, you really don’t. We’re all so good at presenting only the most positive aspects of ourselves (what we perceive them to be, at least) that we really only let our most inner circle in on what’s going on in our lives. And by inner circle, I mean about 5 people. For some of us, even fewer. Think about how much you hold back from even your closest friends, not to mention your social media followers, and extend that to whether you think you can get a realistic perception of someone else’s life.

But knowing that doesn’t make it easy to stop doing it.

That’s where it comes back to focusing on a topic we have written about probably a 1000 times on this site: know thyself.

What are you really in the markets for? What’s your edge that other people might not have? What actually matters to you, not because you want to impress someone else, but because it has utility or meaning for you personally?

Once you start that process of creating self-awareness and focusing on what works for you rather than other people, you’re starting down a path that results in having strategies, styles, and perspectives that actually work for you. And that means you’ll approach every conversation or observation from a perspective anchored in: how does this match up with what I know about what works for me?

Not, how does what this person’s doing demonstrate why I’m such a failure?

That’s when you have a shot at sustainability and profits that feel like they’re coming easily for you.

If you’re ready to learn to apply psychological frameworks like this, email about the Master Course

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About the Author

Charlie Bathgate


Charlie Bathgate is the man behind the scenes making sure everything runs smoothly. He’s also the resident psychology fanatic. He graduated from Duke University in 2009 with degrees in English and Business.

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