Search ForexCrunch

You know how they say the job of every parent is to embarrass their kids? Well after a fair share of embarrassment from my kids, like the time my daughter pointed at a guy wearing an eye patch and said “mommy, a pirate! Arrgggh”, or the time my son said loudly as the lights in the movie theater went out when we went to see Puss in Boots, “it’s pussy time”, I call it payback. I feel as though I spend my days teaching my kids to act correctly in social situations, to not point at people, to not call me a liar when I shed years off my age”¦ but the truth is, there are things our kids can teach us. Kids live by their instincts and are enthusiastic about everything. They are always into learning new things. Kids rock at a lot of things and I’ve spend some time thinking that perhaps there are a few things we can learn from children when it comes to Forex trading.

What can we, as traders, learn from our kids?

Sleep is overrated

shutterstock_291431081

Whomever invented the term “sleep like a baby” obviously had never had children. Unless they meant traders sleep like a baby, then in that case, yeah. Just like babies, traders seem to think sleeping while others sleep is not a thing. While ordinary people go to work from about 9am to 5pm and sleep at night, great traders are up at all hours of the night. If the gold is rising in the Asian market or the EUR/JPY is volatile, profits trump sleep. Unlike babies however, traders do let others sleep, even if they are up.  

Sinning is ok

kid

Kids don’t know about sins. They see chocolate cake on the table and they don’t think gluttony, they simply start clawing at it even if the birthday song hasn’t ended. They don’t care about greed when another kid is playing with the toy first, they want the red truck now. We are the ones to teach our kids that greed isn’t good, that neither is gluttony, that they should only take what they need, not more than that. Well, perhaps there is something to learn from children. In the famous words of Gordon Gecko, “”¦the point is, ladies and gentleman, that greed, for lack of a better word, is good. Greed is right, greed works. Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms; greed for life, for money, for love, knowledge has marked the upward surge of mankind. And greed, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the USA. Thank you very much.” So when trading, don’t be satisfied with what you have. Greed is a good thing, as long as it is applied with discipline.  

Impulse control

shutterstock_157875467

While your impulse control may prevent you from drawing on other people’s faces, you too sometimes lack the self-control needed to trade profitably. You may have complete self-control at the time in which you plan your strategy, but when the market doesn’t behave as you thought it would and you are caught off guard, you can lose control and self-awareness, and make decisions you would never had made, had you been focused and calm. There is loads of research online to help you control your impulses when the market goes south, including these techniques shared by Brett Steenbarger, Ph.D which I find really useful.

Notice the tiny things

shutterstock_124002364

Have you ever tried to go somewhere in a hurry with a kid? It’s an impossible feat. They stop every three feet to look at something. An ant carrying a leaf, a weird-shaped leaf, a paw print. Kids are explorers by nature, and somewhere along the way, we lose that skill. We walk through life faster, we multi-task, we burry our heads in our phones and we forget to look at the details. In trading, details are critical in order to succeed. It’s important for traders to keep a journal with detailed information on every transaction so that a true understanding of performance can be achieved. Log when you entered and exited a trade, what the circumstances were, examine your daily and cumulative P&L, volume, and win percentage.  Analyze market movement and instrument behavior. Dig deep into your performance to really understand your trading.

Judging distance

shutterstock_39853435

Depth and distance are not concepts little kids have mastered and for all intents and purposes, neither have new traders. Fx is known for its highly leveraged entry levels, and in order to reduce exposure, new traders will often place stop losses too tight. When managing you risk, working out the probability of the price moving a certain distance from the open during a given time is critical.

Crawl before you walk

shutterstock_62777086

Every parenting forum and Facebook group has worried parents asking “my kid is this old and he is not walking yet. Should I be worried?” Kids take their time, and provided everything is well with them physically and cognitively, they will achieve each of the milestones they are supposed to achieve, in their own time. They will first master keeping their head up before they move to getting on all fours, before they feel confident enough to crawl. They will stand holding on to something before they start cruising, before they let go and start to walk. Newbie traders should follow suit. First learn: never underestimate the importance of education. Learn by using a demo account, taking courses online, reading books or by copying the strategies of other more seasoned traders. In Forex trading, the saying “First you learn, then you remove the L” proves true over and over again.

Copy others

shutterstock_230376670

Remember your annoying little cousin who used to do EVERYTHING you did? As annoying as he was, he had a good point. Copying someone else with more experience than you have can save you the troubles of learning from your own mistakes. Social trading is a great tool that allows newbie traders to copy the trades and even strategies of more seasoned ones, while they learn the ropes. Social trading may also be beneficial for traders who are experienced in trading one instrument, but want to start trading a different one that perhaps they are not so familiar with.

When you get stuck, ask for help

shutterstock_98533406

Kids get into all kinds of awkward situations and they don’t always know how to get out of them. If as a trader, you find yourself in a losing streak and can’t figure out a way out of it even after you’ve analyzed your every move, ask for help. The problem is often clearer and easier to spot for someone seeing things objectively from the outside. Don’t be ashamed or afraid to ask for help.