3 Ways the Trading Silodrome is Killing Your Profits

A silodrome is also known as a motordrome or more dramatically…the Wall…of Death.

It's a carnival sideshow that involves driving a motorized vehicle, usually a motorcycle, around the inside of a cylindrical structure.

Some performers take it to the next level and use a car.

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 perpendicular 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.

In the context of trading, you may seem like you are making progress simply because you are busy.

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 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 this understanding 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 buy another course, put down your mouse and credit card for a minute.

Take a couple of minutes to read the three ways that you may just be running in circles and driving yourself up the wall.

…and how to get out of that vicious cycle, so you can finally start to make progress.

“You have to walk before you can run.”

– Your Mom

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 are 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.

Solutions to Education Overdrive

There is nothing wrong with seeking knowledge and getting properly educated.

In fact, I feel it's mandatory.

You can see our recommended education programs here.

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 it's not about what you know.

It's all about how you use it.

Do you have a process for improving your trading, or are you always shooting from the hip? 

So take the time to actually learn a trading method and backtest it. Then trade it in a demo account and really get to know the system before you even think about looking for something else.

Journal your trades.

Get input from traders you trust.

Remember that there are only two reasons why a trading system won't work (assuming you are trading correctly):

1. It really is a crap system with no positive expectancy that someone thought up while they were half-baked
2. The system doesn't work with your personality or lifestyle
3. You don't have the right psychology to trade the strategy correctly yet

Before you move on, figure out for sure if the system you are learning falls into one of those three categories.

Backtest the system (if possible) and/or forward test it in your demo account for at least 3 months.

Read this post and figure out your Trading Personality. When you understand your Trading Personality, it's much easier to find trading strategies that might work well for you.

This post will give you advanced trading psychology strategies to level-up your trading psychology.

Do your best to make friends with the system before you decide that you want something new.

If a system tests well, but it doesn't work well in live trading, then take the time to figure out why.

This will save you a lot of money because you aren't buying new courses all the time.

It will also make it much more likely that you become consistently profitable trader. 

2. Speed Tweaking

Another common mistake that I see is that traders 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 (recency bias) or based on your own biases, which may or not be correct.

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.

Solutions to 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 as advertised!

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.

Get some baseline data before you make changes.

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.

3. Bullshit Quick Draw

Some people love to be the first to call bullshit on trading strategies, traders and everything else.

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.

Solutions to 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?

It's really easy to be right. 

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.

That's actually a little scary.

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 before you call bullshit.

Otherwise, you are punching your ticket to ride on the trading silodrome.

Final Thoughts on the Trading Silodrome

So if you aren't consistently profitable yet, you might be on the 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.

Also take some time to review this post on Advanced Trading Psychology.

Your mental gremlins may not be what you think they are.  

If you want to see actual silodrome videos, go here.

 

How else do you see your “friends” going in circles when it comes to learning trading?  Let us know in the comments below.