publication

COLUMN
www.tradersonline-mag.com 04.2014
The Four Agreements
for Traders
» Don Miguel Ruiz, a Mexican author in the tradition of
Carlos Castaneda, wrote a best-selling book called “The
Four Agreements” in 1997. It sold millions of copies and
has acted as a life-clarifying guide for many. How might
these “four agreements” specifically apply to trading
1. Be Impeccable with Your Word
As down and dirty as Wall Street can be, there is a code
of honour among traders. Floor traders and trading desks
are known for confirming deals worth millions, or even
tens of millions in profit or loss, on the strength of a verbal
telephone commitment, a handshake, or even eye contact
and a nod of the head. The whole system works because
all true traders, while fierce competitors down to the last
tick, are also honour-bound to their word. Those who break
the code are rightly banished. Being impeccable means
making damn sure you can deliver, and moving heaven
and earth to come through. Developing a reputation
like this has benefits internal as well as external, as you
become the type of person who “gets it done” in the eyes
of your subconscious as well as the eyes of others.
2. Don’t Take Anything Personally
When going through a rough patch the classic temptation
is to think the market is out to “get you,” that the market
is always opposing you. However, the market is far more
like a force of nature than a personal entity. Does Mount
Everest care who you are Does the ocean care who you
are No. If a freak storm comes up while you are climbing
or sailing, it has nothing to do with “you” – except to the
extent you voluntarily exposed yourself to such risks. Many
traders are smart enough to consciously reject the “market
out to get you” point of view, yet subconsciously indulge in
“woe is me” personalisation on a subtle level. Taking things
personally is all too often a form of whining. As a general
rule of thumb, whiners are losers. The winners are too busy
getting it done – and this means addressing undesirable
results in a detached, objective, wholly non-personal way.
3. Don’t Make Assumptions
Foolish assumptions have swallowed up entire oceans of
profit. The habit of assumption is born of laziness – lack of
due diligence, lack of proper investigation and verification.
Justice ‘Jack Sparrow’ Litle has seventeen-plus years of experience in markets. He cut his teeth as
an international commodity broker with clients on fi ve continents, including a large Russian hedge
fund, and has traded virtually every asset class except real estate. His specialty is global macro.
Contact: www.mercenarytrader.com; E-Mail: jack@mercenarytrader.com
It also stems from a lack of creativity, e.g. the inability to
see an alternative range of scenarios – and sometimes
emotional bias, meaning irrational predisposition to an
expected or demanded outcome.
The number of questionable assumptions traders
can make – and do make, on a routine basis – is veritably
endless. From unexamined notions of how a market works,
to blinding ideological zeal, to unjustified confidence in
a methodology with substantial gaps in process, theory
and execution, to casually misguided assignment of
blame for a bad result (see agreement #2). This is why, in
fact, more traders lose than win.
4. Always Do Your Best
A lot of people half-ass their way through life – and when
they get into the trading arena, it only becomes natural and
habitual and instinctive to do the same thing. Committing
to risk management but not really... committing to a welldeveloped
methodological process but not really... giving
lip service to various aspects of trading excellence but
not following through... As a point of motivation, stop
and ask yourself what might be possible if you really and
truly “always did your best,” every single day. What if you
stopped futzing around completely and totally, committing
to a higher level of focus and dedication than ever before
What if you really and truly found the absolute best within
yourself, and cultivated an iron-clad commitment to
maximum trading excellence What would that look like
What would it feel like How much pain would it require...
and would the pain be worth it Furthermore, what if you
could figure out how to sustain this level of excellence, day
in and day out, not just as a touchy-feely resolution, but true
transcendence to a higher path, as the framework for an
enlightened and evolved way of life How would that impact
your P&L, your success as a trader and your sense of life
fulfilment on the whole How awesome would it be «
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