Thursday, January 7, 2016

Become Innovative and Creative

Creativity is just connecting things. When you ask creative people how they did something, they feel a little guilty because they didn't really do it, they just saw something. It seemed obvious to them after a while. That's because they were able to connect experiences they've had and synthesize new things.
Steve Jobs
There are times when your success depends on thinking differently, outside the box. In a
strong bull market, it is easy to ride the wave and take advantage of the trend. But when the market averages are not trending (which is most often), it becomes a stock pickers market, a little more skill and ingenuity is required. Think creatively, and that means putting in extra effort and going with your gut and intuition.

Trading is not rocket science: figuring out how to fly to the moon or a way to orbit Mars. Being a mathematical genius will not make you a brilliant trader. Indeed, you are probably better off if you do not make it all so complicated. It may be counterintuitive, but keep it simple. Complex mathematical formulas do not seem to work. If they did, scientists, engineers, and mathematicians would be making millions trading the markets. They are not.

You cannot expect the kind of certainty a rocket scientist expects. It does not exist in the markets. There are too many unknown and immeasurable factors to consider. It is next to impossible to know which factors will come into play at a particular moment in time, and account for all of them. Market action is ultimately the result of people making decisions, and when the discretion of people are involved, it is impossible to anticipate exactly what will happen. 

You must become innovative and creative. The more you know about your creative processes, the better you will be at trusting your intuitions. Avoid trying to be creative, if you push yourself this way you will not be relaxed and you ca not be creative if you are not calm and allow free flowing thoughts. The state I am trying to describe is like a meditative one, where you are thinking about the markets but not attempting to force a brilliant idea. You also need a great deal of information to sift through, be it technical information, fundamental information, economic information, or a combination. Do not force yourself to
discover a brilliant idea, just read the information in order to get your creative juices flowing. Study the information. Memorize it. Let it churn in your mind over and over. When you least expect it, you will develop a few good creative ideas. It may be as you drive to work in the morning or are picking up the kids from school in the afternoon. Allow your mind to actively, yet leisurely, consider a variety of issues, and all of a sudden it will hit you, "Wow, I've got it."

Of course your idea is not foolproof; it is not guaranteed to work. There are just too many factors that are unknown and unknowable at the time you take the plunge. That is where risk management comes in, but you knew that. Just because you did not anticipate all the factors does not mean you did not have a creative idea, uncertainty is just a part of trading. Just keep trying, you will find your search for creative ideas is endless. You will greatly increase your odds of success and that in turn will lead to enduring financial success.

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