It's part of human nature to make snap judgements based on the surface-level perception of something. We easily convince ourselves that we understand what's happening or how something works, simply based on how the thing appears on face value.
But if you truly want to understand something, find a solution, or solve a problem, you should try to understand the logic at play. This begins by finding the starting point; figuring out the root cause or the first principles, and working from there.
Many beliefs I've held that have changed over time have been as a result of understanding more about the logic; I hadn't gone deep enough initially. This includes my understanding of the markets and all aspects of trading, but it also applies to mentoring others, running a business, and dealing with situations in everyday life.
Rather than having a shallow understanding of important things and relying on surface-level information, I aim to go deeper and figure out what's really going on. If something is important, it's worth spending the time and effort researching or dissecting what's really at the heart of it.
It’s often the case that what we want to hear is not the same as what we need to hear. But being told what we need rather than what we want can be uncomfortable, both for the person giving the information and the one receiving it.
This is particularly true in the trading industry. There are many hard realities people need to understand, but sharing these truths doesn’t help people sell their products. Instead, companies will play on people’s emotions and sell them an unrealistic dream. This leads to people’s expectations not being in line with reality.
Avoiding the hard truths doesn’t just limit people’s progress, but it can actually cause damage to them both financially and psychologically. Instead, it’s important for people to have an objective view on reality, no matter how disappointing it is to them.
I believe in sharing and embracing the hard truths, because facing reality allows you to create a logical path forwards to reach your potential.
Since this is so important to me, I've even dedicated a page to answering the tough questions that most trading education businesses avoid.
When I reflect on the bad decisions I’ve made in my life, or that I’ve seen other people making, there’s a recurring theme. They’re focused on short-term outcomes without considering the longer-term consequences.
This principle is true in the markets and in everyday life. The best decisions are made when you use second-order thinking. In other words, not just thinking about the immediate outcome, but also what the consequences of that outcome may be.
First-order thinking is quicker and easier, but increases the chance of a bad outcome. Second-order thinking is slower and more deliberate, but reduces the risk of negative situations later down the line.
As Ray Dalio said, “Failing to consider second- and third-order consequences is the cause of a lot of painfully bad decisions, and it is especially deadly when the first inferior option confirms your own biases. Never seize on the first available option, no matter how good it seems, before you’ve asked questions and explored.”
Related to this, I strive to always be a long-term thinker and always avoid the risk of ruin.
It may seem like 'doing the right thing' should go without saying, but we’re constantly faced with situations in our everyday lives where not doing so could work to our advantage. This includes taking actions that it seems no one will know about except for ourselves.
However, this relates to the previous value of considering second-order consequences. Usually when we don’t do the right thing, it’s favouring a short-term positive outcome at the expense of something much more important further down the line.
With the current state of the trading education space, doing the right thing is not a profitable ethos to live by. Instead, it pays to twist the truth, use underhand persuasion tactics, and fabricate reality. But there’s a cost involved in being unethical, whether or not it’s immediately obvious.
At times it may seem like doing the wrong thing is acceptable if no one else knows about it except for you. But while other people’s perception of you won’t change, your perception of yourself will be tarnished.
I will always be willing to give up personal gain if the alternative is the right thing to do. I’m not here for short-term wins, I’m in this for the long-term growth of our followers, Duomo, and myself.
When I started PuriCassar AG and was in the process of setting up an investment fund, there were a lot of negotiations and agreements that needed to be made. Being a competitive person, I always saw these as situations I needed to 'win' and come out on top.
My business partner gave me some great advice. Knowing I like boxing, he gave me an analogy. He said, "When dealing with other people, you need to try to win on points rather than going for the knockout. Otherwise, you might win in the short-term, but over the long-term people won't want to deal with you."
Over the years, I've seen how true this is and it's become a key principle I live by. Trying to gain everything for yourself may work in the short-term, but putting other people first and giving them more value than you're taking leads to outsized gains in the long-term.
You may have noticed, these days people seem to be trending towards a culture of take, take, take. Things are so readily accessible to us all that people now feel entitled, as if any exchanges need to be entirely in their favour.
Likewise, online culture has drifted towards a mentality of 'over-promise and under-deliver'. People gain things by making the biggest statements about who they are and what they can do, without caring about whether they can ultimately deliver on that promise.
These are short-term ways of thinking. You gain in the short-term, but you lose your longer-term credibility, reputation, and respect from others.
I aim to give more than I take, under-promise and over-deliver, and never gain at the expense of someone else (other than when executing trades!) This dictates the types of deals we do, products we launch, and services we provide. My first thought is always about who will be gaining from it.
To be totally honest, 'under-promise and over-deliver' sometimes clashes with my level of ambition and self-belief. I have a tendency to take on too many things at once, and fully believe in my ability to do them all to a high standard. But when I take on too many things, my time is spread too thinly and it becomes impossible to achieve my best in everything. That's something I've improved on over the years, and it's a valuable principle to keep in mind.
More often than not, it's the output or result of something that matters most to us. In many cases, it's the thing that our success is measured against.
Let's look at trading as an example. The output is the return you earn, and that's what most people will measure your success against. But if you really wanted to understand the quality of a trader's performance, it's actually the inputs you should be focusing on. One-off outputs can be luck rather than deliberate.
Likewise, if you want to improve something or achieve consistency in something, you should focus on the inputs, and the desired output will follow.
This is difficult to do, because it's often the case that you have to consistently work on the inputs long before the desired output is achieved. Many people see the output lacking and it causes them to get frustrated, lose motivation, and give up.
I've discovered time and time again, my desired outcomes can be extremely simple if I identify the few inputs that matter most. Once I've identified them, I have to forget about the output and just focus on being as consistent as possible at achieving those inputs to the best of my ability.
When I focus too much on the outputs, I can overcomplicated the process to achieve them. By focusing on the inputs, I can use 80/20 thinking to find the 20% of inputs that are responsible for the majority of the outcome.
This also relates to "Figure out the logic", because it's that way of thinking that allows me to figure out which inputs deserve my focus.
The thing that made me fall in love with trading was not the potential to make money, it was the potential to make discoveries. My passion for the financial markets has only got stronger over the years by learning and understanding more about the markets, the global economy, and human nature.
Passion is one of our internal drivers, and developing a passion for something is the second step in the sequence for achieving high-performance. But what's the first step? Curiosity. Curiosity develops into passion.
Curiosity is a magical product of our neurochemicals; we're built this way for a reason. Whenever I've followed my curiosity, I've discovered remarkable new things, found more joy in my work, and made hard work effortless. As much as work ethic and serendipity have played a part in my success, the biggest factor has been my curiosity.
I always try to continue learning and exploring my curiosities. I don't want to stop at surface-level information, I embrace going down rabbitholes rather than seeing them as distractions. It might seem like curiosity steers me off track at times, but more often than not it ends up being like a compass leading me to the good stuff.
For many years with my trading, I blindly followed sacred cows I'd picked up from various books and resources. The same rules, principles, and beliefs that I see many traders religiously abiding by today. For a long time, I didn't think to question them.
But as time went by, I began to notice how illogical a lot of this stuff was. I began testing things, researching topics, and figuring out the logic behind it all. I soon realised that so many things traders rely on as being factual are nothing but outdated received wisdom, passed on from one trader to another across generations - unproven, disproven, or unfounded.
It can feel unsettling to go against the crowd and take a contrarian path. In fact, if you listen to the self-doubt, you'll convince yourself that you're wrong and everyone else is right. Sometimes they will be, but not always.
There's a famous quote by William Calvin that says, "You can always spot the pioneers by the arrows in their backs." Being the first to do something or going against the grain is not usually easy. Especially in the online world, you open yourself up to a lot of criticism. This is something I try to accept and embrace.
I care about uncovering the facts and figuring out what's right. I try not to be swayed by the desire to have other people agree with me. The truth is what matters most.
As Steve Jobs said, "Don’t be trapped by dogma — which is living with the results of other people’s thinking." As traders, we're trapped by dogma far too often.