A silodrome is also known as a motordrome or more dramatically…the Wall…of Death. It started as a carnival sideshow and involves driving a motorized vehicle, usually a motorcycle, around the inside of a cylindrical structure.
Spectators watch from the top of the cylinder. The vehicles drive around the bottom of the cylinder until they get enough speed to eventually climb the walls and drive parallel to the floor.
What does this have to do with trading?
Movement Does Not Always Equal Progress
Well, this is a perfect analogy for what I see a lot of traders doing.
They are on the Trading Silodrome.
The reason that silodrome riders are able to stay on the wall is because they are going fast enough that the centrifugal force holds them on the wall. But no matter how fast they drive, they are still just going in circles.
I have certainly been in the Trading Silodrome myself, until I started to understand what I was doing and was able to ease myself off the wall. In addition to seeing these signs in myself, I have seen them in countless amateur traders I have met over the years and people who have contacted me through the blog.
In this post, I will share some specific ways to know if you are in the silodrome and how to get back on flat land, so you can actually make some trading progress.
I'm not saying that understanding this will make you instantly profitable. But I hope that if you are in one of these loops, that this post will help you get out of the rut. So before you are tempted to “learn” anything new with regard to your trading, put down your mouse and credit card and take a couple of minutes to read the three ways that you may just be running in circles and driving yourself up the wall.
1. Education Overdrive
We can mistakenly think that continually learning new techniques will eventually bring success. So we spend money on new courses and join new trading communities as fast as we can find them, to learn the “secret” that seems to be eluding us.
The reality is that when we do this, we are just driving faster and moving higher up on the silodrome wall, not actually going anywhere. You can literally spend a lifetime “learning” and not become a better trader.
So if you are constantly after the next new trading system and have already spent a ton of money but haven't placed a trade yet, you may be in Education Overdrive. Or if you “try” a trading system for 3 months, then just drop it and go searching for the next trading system, then you may also be in Education Overdrive.
2. Speed Tweaking
Another common mistake that I see is that people want to constantly fiddle with a trading method before they even get a good feel for how it works. The problem with this is that you are always trying to “optimize” the system based on your last trade or based on your own biases that may or not be correct (usually not).
If you do this, don't have a solid trading strategy and by default are actually trading the SWAG system. Take a minute to reflect on if you do this or not. It is a natural tendency and you may not even realize you are doing it.
3. Bullshit Quick Draw
Some people love to be the first to call bullshit.
They are riding their silodrome motorcycle backwards, with a blindfold, no hands and at the very top of the wall. They think they know better than everyone else.
But the fact still remains that they are going in circles.
If you have the tendency to immediately think that something won't work, then guess what? You will always be right because you will give up long before you ever find out the truth about a trading method.
The question you have to ask yourself is: do you want to be right, or do you want to be profitable?
The Linear Path To Progress
“You have to walk before you can run.”
– Your Mom
Now I'm going to propose some solutions to these three common mistakes. The key is to slow down, get off the Trading Silodrome wall and figure out what works for you and what doesn't.
I don't pretend to have all the answers, but here are some great places to start.
Curing Education Overdrive
There is nothing wrong with seeking knowledge and getting properly educated. In fact, I feel it is mandatory.
The problem does not lie in the quantity of information, but the quality of its utilization. That is just a complicated way of saying that the only thing that matters is how you use that there fancy internet learning.
So take the time to actually learn a trading method inside out. Then trade it in a demo account and really get to know the system before you even think about looking for something else.
Remember that there are two reasons why a trading system won't work (assuming you are trading it as taught):
- It really is a crap system with no positive expectancy that someone thought up while they were half baked
- The system doesn't work with your personality or schedule
Before you move on, figure out for sure if the system you are learning falls into one of these two categories. Backtest the system (if possible) and/or forward test it in your demo account for at least 3 months.
Really try to make friends with the system before you decide that you want something new. This can also save you a lot of money, since you are not buying new courses all the time.
Curing Speed Tweaking
In a similar way, you can cure speed tweaking by just sitting down and trading a method exactly the way that is has been taught. Stop messing with it all the time.
Guess what? It may actually work!
Then again, it may not work.
But if you trade it exactly as it has been taught, this will actually give you the best clues as to what you can tweak in the system to make it work better later, or if you should just throw the whole thing out. Keep a trading journal and figure out when you are making your own “improvements” to the system.
Remember that changing your system all the time is like adding random ingredients to your dinner recipe. They will both leave you with a bad taste in your mouth.
Curing Bullshit Quick Draw
If you call bullshit all the time, you simply have to ask yourself, do you want to be right or do you want to be profitable? Being right is really easy. Just say that nothing works and you will always be correct…it will never work for YOU…because you won't let it.
Being profitable is whole different story. It is actually even a little scary. This is because there is a chance that you may fail. And you have to actually put in some work.
That being said, if you want to continue to be right, then keep doing what you are doing. You are already getting what you want out of trading. You don't actually need to make money.
However, if you want to move towards being profitable, then keep an open mind whenever you learn a trading system. I'm not saying to believe everything you read, but be willing to figure out if a system really doesn't work (see curing Education Overdrive above).
So if you haven't found anything that you can really sink your teeth into yet when it comes to an effective trading system, take a minute to consider the fact that you may be spinning around the inside of a Trading Silodrome. If so, then figure out what kind of speed freak you are.
Maybe your education is stuck in overdrive or you make unnecessary tweaks or you are masking your insecurities by calling everything bullshit. Whatever the case may be, careful reflection and maybe even some meditation can be just what to need to get some proper perspective.
How else do you see your “friends” going in circles when it comes to learning trading? Let us know in the comments below.