May 25, 2024
•
Read time:
5 minutes
It’s commonly accepted that it takes great personal sacrifice to become world-class in any skill.
This belief often serves as an excuse for people not to give their utmost effort in achieving their goals.
Over the years, I’ve seen this pattern repeatedly with people learning to trade.
Since they think there’s a huge cost in giving it their 100% effort, they settle for mediocrity instead.
But there's an irony here that most people don’t realise.
Consider these questions from James Clear and try to answer them in relation to how you approach your trading development:
“What's the cost of doing a poor job? What's the cost of doing a mediocre job? What's the cost of doing an exceptional job?
Which price are you willing to pay?”
Some of the costs involved in doing an exceptional job are time, effort, discipline, and discomfort. This often means making other sacrifices to free up time and energy.
These are usually the reasons that stop people from doing an exceptional job. They’re just not willing to pay that cost.
- They avoid learning difficult topics.
- They stay in their comfort zone rather than addressing their weaknesses.
- They focus on the fun parts of trading and avoid the tedious (but necessary) aspects.
Whether consciously or not, they believe there’s an easier path that requires less of them.
But let’s think about what it means to do a poor or mediocre job? What are the costs?
It might seem like they’re lower. But, ironically, you’re actually more likely to incur much greater costs.
Here are three key reasons why…
#1 Longer Development Time
Ever since I was a kid, I’ve always had at least one guitar nearby in my bedroom, living room, or office.
When I was at college and university, I was more dedicated with my guitar playing and spent at least a couple of hours playing each day.
Across that six year period (2 years at college, 4 years at university), I estimate that I spent a total of at least 4,000 - 5,000 hours playing guitar.
And I improved significantly. I went from playing simple songs to being able to shred an Avenged Sevenfold solo.
But then I graduated and started my job in banking. Suddenly I didn’t have as much time, and playing the guitar just wasn’t a priority.
Over the 14 years that followed, I’ve been very inconsistent. Most days I don’t play at all, and occasionally I go through a week or two where I get back into it and be more consistent.
I estimate over these 14 years, I’ve played my guitars for around 1,500 - 2,000 hours.
And how much has my playing improved during that time?
It hasn’t. It’s got worse.
It’s cost me time and effort, but without seeing any improvement.
But, if I spent that same amount of time and effort in a more focused, effortful, and consistent way, my skill level would have continued to improve dramatically.
Same time spent, but much greater results.
#2 Mental Cost
When you’re mentally invested in a goal or a dream, the more time that passes without you achieving it, the more negatively it affects you psychologically. You’ll experience frustration, disillusionment, and lower self-esteem.
You see, we all have an intrinsic drive to get better at the things we do. When we achieve a small gain, success or win, we produce dopamine. This is our brain's way to push us to act, take risks and seek new ground.
When we work on an important goal, our dopamine levels spike. A series of these spikes each day is what gives us that inner feeling of momentum.
As Daniel Pink says in his book 'Drive', "The single biggest motivator, by far, [is] making progress on meaningful work." We can consider the term 'meaningful' to relate to our greater meaning and purpose.
However, the opposite is also true. When you aren't making progress on meaningful work, scientists have found that it can be the single largest drain on motivation.
In short, momentum is the best feeling for high performers, but a lack of momentum is the opposite. Spending time without making significant progress is draining.
#3 Opportunity Cost
Then there’s the obvious one. The longer it takes you to achieve your goal, the greater the opportunity cost. The extra time you spend developing the skill is time taken away from earning with it.
And for many traders, it means they never achieve their goal at all. They’ve paid the cost but not achieved any reward.
Think About This…
If you're going to be spending time on your trading anyway, why not use that time as effectively as possible?
As we’ve just discussed, a simple cost-benefit analysis shows that focusing on doing an exceptional job is the much better deal.
In fact, I have a great example of this…
With members in our community, we run something called the Monthly Transformation Contest. I’ll explain more about how this works in a separate article. But basically we give our members a guide for planning how they’ll make a dramatic improvement in their trading over the next month in a way that’s focused and measurable. We make it a bit of a competition to see who plans and executes the best transformation.
But this MTC process has revealed something really interesting.
Some members followed the steps perfectly:
- They identified a specific area they needed to improve
- Set a plan with clear actions to directly develop that area
- Found ways to objectively measure their progress
- Gave full focus and effort during their sessions
On the other hand, some members didn’t do that. Instead, they set a vague plan that allowed them to just go through the motions and do what they normally do any other time.
By the end of the MTC, members in the first group saw dramatic improvements in just one month. They’d made huge strides towards their goals and had noticeably better results. Whereas, members in the second group just had a regular month and were not even able to tell if they’d made any more progress than normal.
Both groups used the same amount of time as they usually do. But those who had a focused plan and gave it 100% were able to benefit massively and transform their trading.
As the old saying goes, if something is worth doing, it’s worth doing well. Remember, the cost of mediocrity is far higher than the price of excellence.
