Imagine staring into the abyss of your trading screen, where every decision feels like a leap of faith, and success is as elusive as a mirage in the desert.
Now, what if I told you that the key to breaking this cycle, to turning those leaps of faith into strides of confidence, was revealed by Albert Einstein not in a complex theory of relativity, but in a single, transformative word: “invert.“
A Lesson from Einstein: The Power of Inversion
Albert Einstein famously embraced the concept of inversion. He believed that to truly excel or solve a problem, one should first understand how to produce the opposite result.
It’s a principle that flips conventional wisdom on its head, urging us to view our objectives from an entirely new angle.
Plus, from an evolutionary point-of-view, our brains are programmed on problems (aka surviving). Therefore, it is much easier to identify a huge list of problems instead of looking for solutions (in a first step).
Here’s How I Applied Einstein’s Concept To My Trading Strategy
In my journey through the world of cryptocurrency trading, I decided to apply Einstein’s wisdom. The exercise was enlightening. Here’s what I did:
Step 1: Envisioning Failure
First, I listed all the ways I could spectacularly fail at trading:
- Making decisions based on emotions.
- Always trying to catch a hype.
- Ignoring the safety nets like stop-loss orders.
- Randomly selecting coins without any research.
- Overlooking market analysis and trading indicators.
- Etc.
I ended up with writing down a list of like 30 epic fails in just 10 minutes. It’s impressive how fast our brains can think of problem 🙂
Step 2: The Art of Inversion
The next step was to invert these scenarios.
This means, I turned the problems into solutions — which was a super straight-forward task. Here are a few examples:
- Making decisions based on emotions -> Eliminate emotions from trading decisions and trade purely on a fact-based system.
- Ingoring the safety nets like stop-loss -> Implement and strictly adhere to risk management practices.
- Overlooking market analysis and trading indicators -> Integrate market analysis and trading indicators into the decision-making process to inform and guide trading strategies.
Again, this exercise took me probably 10 minutes.
Step 3: Breaking Down the Solutions Inti Skills & Actions
And here’s the last step and usually the one that is slightly more complex.
You have to understand that solutions are a collection skills and actions. Therefore, it is crucial to dive deeper and identify the required measures.
For instance, “Eliminate emotions from trading decisions and trade purely on a fact-based system” could involve skills and actions, such as:
- Setting Up an Emotions Journal: Document your emotional state before, during, and after trades to identify patterns and triggers.
- Defining Fact-Based/Rule-Based Entries and Exits: Create a trading plan that outlines when to enter and exit trades based on objective criteria, not gut feelings.
- Sticking to the Trade’s Goals: Once a trade is in motion, avoid altering its objectives based on market noise or emotions. Stick to the plan.
- Etc.
It’s the granular actions that breathe life into vague solutions, making them tangible and actionable.
By specifying what each solution entails, we transform abstract concepts into a concrete roadmap for trading success.
The Transformative Impact on My Trading
This three-step inversion technique didn’t just help me avoid common pitfalls; it revolutionized my trading strategy.
By understanding the pathways to failure and translating desired solutions into specific skills/actions, I was better equipped to navigate towards success.
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