One thing is as certain as death and taxes- whenever there are emergency relief funds being offered in times of crisis, there will be opportunists who will attempt to game the system to get some of that money.
A man in Texas took advantage of the PPP program that provides money to companies affected by Covid-19 to keep paying people on payroll by creating two bogus companies, named “Texas Barbecue”and “Houston Landscaping”, then applied to get loans for them.
The plan worked and he was able to get over a million in funds from the government. He put the bulk of the money into a crypto-currency account with the remainder going into a bank account for personal use.
Needless to say, the government on checking the loan eventually found out that the companies were bogus, and soon after that arrested the guy for felony fraud.
It’s amazing that these “criminal masterminds” never think the government is going to catch on and take action on such poorly conducted scam attempts.
On a side note, the money the guy put into the crypto account has actually become a profitable investment with the market’s rise in value, as the account hasn’t been touched and is likely being held as evidence. Do you think he will try to spin that as a positive to help his case in court? 😄
Unconscious incompetence– you have no idea how bad your are.
Conscious incompetence– you realize you are quite unskilled.
Conscious competence– you learn the skill but you have to think about it while doing the tasks.
Unconscious competence– Able to perform the skill automatically without needing to think about how to do it.
This works for rote learning subjects that are procedural and repetitive where the steps are known in advance and all that’s needed is competency in completing them.
Trading skill isn’t acquired by rote learning, it belongs to the activities that require real time analysis of situations that are not known in advance and being able to create a solution on the fly for the problem.
This is the reason why the clear majority of trading books and classes are ineffective in teaching anyone to be a successful trader. They “sell” being able to learn to trade as if it’s a step by step procedural process.
The route to trading mastery is different from the above steps and each step is an incredibly difficult one to get past. It’s the reason why most analytic stats have successful traders to be less than 10% of all who try.
These levels are the reason why:
Unconscious Incompetence– This is where everyone starts.
Conscious Incompetence– You would think this level would be easy to leave once you admit you don’t know how to trade, but it is actually one of the most difficult levels. Before you can truly learn how to trade, you have to give up all your preconceived ideas about how trading works and how prices move. This is incredibly difficult due to ingrained beliefs we have on top of bad information we have taken in. It’s your “unconscious” pseudo knowledge along with bad info that will prevent you from letting your brain come up with a true solution.
Here’s an example of unconscious “wrong beliefs” overriding what you KNOW at the conscience level to be true- the “Bowling Ball Pendulum Test”. A bowling ball is used as a pendulum to show the science principle of conservation of energy. If you hold the bowling ball to your face and let it drop under its own weight it won’t hit you on the way back. Despite knowing this, many people will still flinch or duck when they see the bowling ball rushing towards them.
Why does the person duck/flinch even though they believe the science to be accurate? Because we have ingrained subconscious mental responses to perceived threats that can easily override our conscious thoughts.
Now apply that to trading, where people who at least have the discipline to create a trading plan, only to break from it during the trade time and time again. Market movement is geared to look threatening many times as it moves along and unless one has absolute discipline to master their thoughts to tune out the instinctive “fear” response, they will never be able to follow their trading plan, much less develop it to be something effective.
Another hindrance is from the conscious mind that comes from reading a trading book or taking a trading class/seminar that has bad information. Your mind can’t come up with a working solution if it is still holding on to defective information posing as solutions. The moment you start taking in new information from someone of how trading works you are creating a box in your mind that constrains your thinking and limits your ability to find solutions.
The only way out is to strive to let everything go about what you think you know about trading and look at it from a purely untarnished perspective and start from scratch. This is not easy to do by a long shot and goes against our natural reasoning and intuition which is why the majority of folks can’t get past this level.
3. Unconscious Competence – This is a critical difference from the standard mastery progression list. The standard list has “conscious competence”, but that only applies to skills that can be shown to you in advance that you then try to duplicate. Trading is not about repeating what you see, but understanding it from within to be able to properly execute. This can only be done by your mind recognizing general price movement patterns over time based on the framework of what you’re using for your analysis. Another term for this is developing your gut instinct to be aware of how price is moving.
This can take thousands of hours of chart watching and analysis using the tools you are most comfortable with (trend lines, Fibonacci, indicators, pivots, etc…). While you may see little if any progress on the day to day, your mind on the subconscious level is trying to solve the problem you are working on, and if you are capable, with any luck, over time (which could take YEARS), will start to come up with solutions. If successful, this is the initial stage of trading mastery where your accuracy in trade entries and exits improves dramatically and you trade like you actually know what you’re doing. The trades work and the money rolls in. Only a small fraction of people reach this level but true long term mastery can only be had if one can reach the next level.
4. Conscious Competence– The next to last level was “gut instinct” intuitive mastery of trading and many folks mistakenly stop there thinking they have reached the peak. The problem is this trading isn’t on the conscious level, as in the trader knows exactly what they are doing and how to map out a trading plan without needing gut instinct/intuition. The last level is basically replacing unconscious intuition with conscious knowledge that can be mapped out in procedural steps.
The reason why it’s imperative to convert over to a conscious level of trading knowledge is that markets shift in day to day behavior over time and those that only use gut-instinct/intuition will likely lose the ability to recognize entries/exits as the market shifts because they don’t know what adjustments to make, but a conscious level trader will. These instinctive masters are the folks that typically were once good traders but slowly lost their ability over time.
Achieving the conscious level will enable adapting your strategy to suit the changing market because the mechanics of what to do are consciously known and areas that need adjusting stand out.
The really bad news about achieving this level is that getting to a conscious level of knowledge from the instinctive level is extremely difficult and is like trying to write down all the details of what happens in a dream. Even worse, the act of trying to “think” about your instinctive trading methods to put them on paper is likely to cause them to shut down and not work anymore because of conscious thought collision. An example is going down the stairs fast. You can move downstairs quite fast automatically but if you actually start to think about the mechanics of your feet moving down the stairs, you’re likely to trip up and start falling because the unconscious mind controlling your movement is switching over to conscience mode.
This means you are likely to lose your skills gained made by instinctive mastery as you pursue the effort to bring the subconscious trading methods to the forefront. This is the most difficult level of all to achieve.
July 2 marks the midpoint of our current year, and what a year it has been to date on a global scale!
A summary of our apocalyptic events experienced this year status check:
1) Pandemic that originated in China, made its way to Europe, then to the rest of the world in short order thanks to the efficiency of modern travel and failure of leaders in most countries to take the threat seriously until they started experiencing it first hand.
2) Record unemployment amid the resulting business shut downs as most countries started quarantine “stay at home” mandates.
3) Record supply shortages as people panic shopped for supplies and opportunists hoarded supplies to sell at inflated prices.
4) Massive civil unrest triggered by the deaths of minorities at the hands of police that many feel were unjustified- the worst being the video of an execution of a man already restrained by police who did nothing to help as he suffocated from them leaning on his neck and back.
The above were well covered by the media and is still ongoing. But there are other major “apocalyptic” events taking place which may have been drowned out by the above coverage of events:
There has been a running debate on whether the President of the United States is acting “presidential”, as in, behaving in ways befitting the office and position as one of the most powerful and influential people in the world.
There can be no doubt after today by any sane standard that Trump is failing big time in this category with his action today of retweeting such a racially polarizing video of a man chanting “white power” among other profane language heard.
This truly marks a new historical low in point in actions unbefitting the leader of the free world.
This past Thursday saw the market drop 7% in continued selling throughout the day.
That’s the worst point drop since March when prices were in free fall.
Efficient Market Theory (EMT) states that at any given time, the market is correctly priced that reflects all information available. Proponents of this theory state that “timing the market”, otherwise known as short term trading is pointless as no one is able to outperform an efficient market.
The dramatic moves on Thursday as well as this past year pours cold water all over EMT. Lets take a look at current year activity:
The market was ascending from last year through much of February carving out new all time highs DESPITE information being broadcast about Corona Virus in China and the devastation happening in Italy. The market basically ignored that information despite the warnings that the virus was spreading to other countries.
Only when hospitals started filling up and cities followed by States in the US started shutting down operations in March did the market factor in the “risk” and then began a dramatic free fall. Then at the end of March, amid all the government financial/economic assistance measures, the market began rising again inexorably upward and once again ignored any bad news about resurgence/spikes of the virus or a second wave return. That is, until last Thursday when it decided it was finally a good time to worry and sold off sharply.
There should be no “wild swings” if EMT were true, as the information the market was acting on was available for weeks prior to the reaction.
This lends credence to people being able to profit via trading by doing proper due diligence in reading market conditions in forecasting future results. In other words, this is clearly a “traders market”, providing many opportunities to take advantage of the increased market volatility.
That’s not to say trading well is “easy”, but that it definitely is possible for people to take advantage of a market that is not in lock step with available financial news.
One thing I’ve noticed on several occasions on perusing social media these past few weeks are awkward attempts at “race/ethnicity” relations by those of Euro-heritage to POC that wind up going bad because their attempts wound up being unintentionally offensive.
One of the first and most frequent traps people fall into is saying “I don’t see color”, which the person saying is trying to convey they don’t have a bias, but to the POC, it’s taken as a glossing over of the obvious issues of discrimination that is endemic in society.
The next issue I see are people getting offended/defensive when a POC calls out awkward statements or points out bias they encountered from that person or in a general sense. This also results in a break down of communication or an escalation of verbal hostilities.
The first real truth is nearly all of us of all ethnicities have built in unconscious and conscious “bias” based on how we were raised and who we associated with while growing up throughout our lives.
I happened to view a sermon this past week which addressed these issues head on and did it quite well.
It provides a good perspective of helping to identify our group biases and how to deal with them to help change our perspectives and eliminate them.