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Hidden Systemic Forces
Here's a quote from that book I mentioned recently, The Fifth Discipline by Peter M. Senge; he is talking about leaders in business who had a genuine passion and commitment to the vision of their business, but the company collapsed regardless due to what he calls 'hidden systemic forces':
"Such visionary crisis managers often become tragic figures. Their tragedy stems from the depth and genuineness of their vision. They are often truly committed to noble aspirations, but noble aspirations are not enough to overcome systemic forces contrary to the vision. As the ecologists say, "Nature bats last." Systemic forces will win out over most noble vision if we do not learn how to reorganize, work with, and mold those forces." 1 Can you see how this relates to trading? New traders are similar to visionary businessmen in the sense of having 'large visions' for the future, yet as Senge points out "Nature bats last", or we should perhaps say in this case "The market bats last." The most important line is this: "Noble aspirations are not enough to overcome systemic forces contrary to the vision." Most new traders have no system, yet having no system is still a system in the broader sense of the word. There can also be systemic forces contrary to the vision within the trader himself, such as laziness, greed etc. Yet even traders with a system fail due to these 'hidden systemic forces' which usually always play out over a large period of time; Senge points out earlier in the book that our brains are not wired in such a way that we can comprehend systemic failure over a long period of time (years) and uses the old 'boiled frog' analogy as a classic example, i.e. if you throw a frog in a boiling pot he will dive straight out, but if you put him in cold and slowly heat the water he will allow himself to be boiled to death. So it is in business, and in trading. Its very worth reading this excellent final post from the Soul Trader blog - he and his crew traded a trading system to over 100K (one of the best cases of successful retail forex trading I have ever heard of), but then they lost a massive amount of it due to what turns out of be a hidden systemic problem. Read this fascinating post here: http://grailtrading.blogspot.com/ I think its worth printing that post out and keeping it for future reference. Something to ponder. 1. Peter M Senge, The Fifth Discipline |
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