Trading / Investing

Nicholas Dreams of Trading

6 Min Read

Yesterday I spoke to you about Jiro, from the documentary ‘Jiro Dreams of Sushi’ and how he gives a masterclass in how to approach your own trading.Today I want to talk about how you can start to put his approach into practise with your trading and reap the guaranteed rewards. Or as I like to call today’s lesson: ‘Nicholas Dreams of Trading’ (or more specifically, Nicholas Dreams of Being Robin Hood – as you’ll find out).If you read my email yesterday you would have seen me mention that I used to dream of trading every night, and that is absolutely true. However, it wasn’t just dreams of executing positions that I had - I also had one overall dream for trading… my vision.This will only take about 5-10 minutes to explain, but I hope you will use this information to take permanent action with your own trading, as I truly believe it will transform the way you operate.

Nicholas Dreams of Being Robin Hood…

When I first started PuriCassar AG in Zurich, my business partner and I had a vision to bring extraordinary returns to ordinary people, regardless of their wealth bracket. Unfortunately, we were restricted by regulatory requirements which meant our vision had met its first obstacle. This was a disaster for us, as we had our heart set on taking a Robin Hood approach in the investment industry by helping hard-working people get an edge in their finances.In reality, this is where things started to get interesting. The cool thing about a vision is that you may have obstacles to overcome trying to achieve it, but in the end you will find a way to make it work. It’s what compels you to continue working hard at something.The Duomo Initiative is the realisation of our vision. If we couldn’t give everyone their fish, we would teach them how to catch the fish for themselves…and that is exactly what we’re doing – teaching you all how to reel in the big Catch of the Day from the markets on your own.

So what does this have to do with your trading?

Well, you know that every successful business has a vision that leads them to operate in a particular way, right?Of course, we all know that.So why should trading be any different?Many of us treat trading as a hobby or as something we do on the side; like a part-time job. In reality, as a trader you are closer to being an entrepreneur than an employee - you could think of yourself as a trader-preneur. As a result, you should be operating as a business. This means you need to make some changes in your approach.

Do you have a vision for how your trading should be?

In the film ‘Jiro Dreams of Sushi’, Jiro has always had a vision of creating sushi better than anyone has ever tasted before. He was constantly improving his recipes and methods for running his business, so that eating sushi at his restaurant is an experience like no other.This led Jiro to taking certain decisions that competitors may have seen as crazy - spending more on the very best ingredients, having an allocated eating time for customers and even significantly limiting the number of people that can be hosted at the restaurant (only 10 people!). Any other business would see this as a disaster, since it doesn’t keep an emphasis on the bottom-line of the company. For Jiro, this was just building his dream.You may remember from my article ‘Make Your Stars Align — We Can All Be Genius Traders’, I discussed the topic of setting a target. I specifically stated that you shouldn’t make money your target, as everything comes at a price. Instead, you should be focused on something more tangible and have a specific value attached to that. Whether this is a specific lifestyle you want, a purchase you are focused on or even just a particular way of working.Let’s take that target now and turn it into a vision for your trading. After that, we can start to prepare a plan of attack - your very own business plan for your trading.Your vision for trading may change over time and will vary right now depending on what stage you’re at with your development. For example, a beginner may simply want to become a profitable trader, an intermediate trader may dream of giving up their full-time job to focus on the markets and an experienced trader may have their eyes exclusively set on living a life of luxury.This is entirely up to you - it doesn’t even have to be particularly realistic, as long as it is compelling enough that you will put all your effort into achieving it.Note: I said ‘not particularly realistic’, not ‘delusional’ - let’s not all attempt to become billionaires overnight!A little trick for coming up with your vision is to use visualisation. If you close your eyes and imagine your life 5 or 10 years from now, what role does trading play in it? Try to describe that in words and turn it into a goal to work towards. Let’s take this as an opportunity to imagine our perfect life and find a way that trading helps facilitate that. The more compelling and descriptive you make your vision and the more aligned you make it with your core values as a person, the more chance you will give yourself of conquering it.

Now I have my vision… what’s next?

Now it’s time to engineer our vision. We’re going to adopt a method which is commonly used by chess Grand Masters called retrograde analysis. This is basically a process of taking the end goal and working backwards from that to find the optimal sequence of actions that will help you achieve it - it’s also great for problem solving!What steps will lead to you achieving your vision? Are there certain dependencies for each of these steps that need to be achieved first?What signs will there be that you are on the right path?If you are talking about financial goals, what average compounded return will you need to achieve weekly, monthly or annually?What actions can you take to help achieve your vision more easily?Who can help you to achieve particular goals?What are the stumbling blocks you have to get around?These are the sort of questions you need to ask yourself, which will help you build milestones and an action plan. Ultimately, these will help you begin creating your trading plan itself, which is a whole new discussion.I want to do you justice on this topic and speak about it in greater detail, so it takes away a lot of the strain and effort from trading. When you have a clear plan, you can concentrate on trading the correct way for you and focus your decisions a lot better. However, this will take a lot more time and I want to leave you with just enough on your plate to cope with for now, before we go even deeper and more specific.In order to help you, I have some exciting news which I’ll be sharing this week. I’m sure you’ll be interested and will find that it transforms the way you trade. More of that later this week.