The Self-Employed Person: The
self-employed person is basically motivated by control and doing it right.
Notice that I often talk about how these motivations constitute some of the
biases that most traders have—the need to be right and the need to control the
markets. The self-employed person is the entire system. They are basically
running on a treadmill only they don’t know it. And the more they work, the
more tired they get.
Like the employee, the
self-employed are working for money. However, they like it a little better,
because they are in charge. They think working harder will make them more
money, and to a certain extent, it does. But mostly, working harder gets them
tired. Nevertheless, they continue to plow forward, thinking that they are the
only ones who can do it right.
As I said earlier, the
self-employed person basically is the system. And quite often they cannot see
the system because they are so much a part of it. They are stuck in all the
details. In addition, they have a strong tendency to want to “complexify”
things. They are always looking for perfectionism and they believe that the
perfect system must be complex. They are always asking, “What will make my
system perfect?”
A lot of people come into
trading from the self-employed mentality—doctors, dentists, and other
professionals who had their own small business in which they were basically all
of the systems in one. This is all they tend to know and they approach trading
the same way. They keep adding complexity “until it works,” even though this
strategy seldom works. The self-employed person would be likely to have a
discretionary system that is constantly being changed.
The Business Owner: A good
business owner should be able to walk away from the business for a year and
come back to find it running better than before. While this is an ideal type of
statement, it has some theoretical truth to it. This should occur because the
job of the business owner is to design a group of systems to run the business
so well that his employees can do the job by themselves (or at least with a
manager in place). In other words, the business owner is someone who designs
systems and these are usually simple systems.
The business owner usually does
very well in the trading arena if they approach the process the same way that
they’ve run a business before. And, of course, the business owner would usually
hire someone to run their trading system, at a much lower wage.
When Tom Basso,1 who is
interviewed in The New Market Wizards, did workshops with me, he always
described himself as a businessman first and a trader second. Part of Tom’s
perspective was to look for repetitive tasks that a human being in his
organization has to repeat over and over again. When he found such tasks, his
job was to develop a program to take that task out of human hands. Routine
computer programs are great examples of simple systems.
By Dr. Van Tharp
Profits from games of knowledge: https://www.predictmag.com/
