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By Terry Leslie

Developing independence is a skill that might take you several years to truly develop. Just like all skills along the way, you grab their notion, flip them around a bit, chew on them, and then apply them experimentally until you feel you are really on track. Then you grow a little more and you start the same process all over again. So as you are developing your independence, how can you move from a state of not considering the crowd to make your decisions while still using the herd for some valuable information?

We gather our feedback from a multitude of different places. When we evaluate whether we sold too early, held on too long, or simply made a poor call altogether, we look to numerous different aspects to develop this opinion. For many of us, while we are in the learning stages, we have a very difficult time reading the crowd as information only.

We tend to feel a sense of pressure to either follow or to break away based entirely on the skill we are developing in the forefront. Perhaps you are practicing making your own decisions without considering what the masses are up to. You check in on what the herd is doing and even perhaps you can ascertain who and what they are following. When you do this you might be reacting in one of two ways.

You might react with a strong desire to change your decision based on the fact that you are feeling too separated from the herd or that you are too close to the herd. You haven”t yet come to terms with using the crowd as a method of interpreting information versus using them to check up on yourself. Doing this is still a form of the ever popular herd mentality, but it is also a closer step toward understanding the process of devouring the information available by understanding their actions.

The second way you might react comes from a place of curiosity. As you look at where the crowd is heading you find yourself asking why, how it looks like they are influencing the market, and of course, whether they are making strong and successful decisions. When you reach this place of questioning, you are then using the herd to develop theories based on the information that the herd provides you.

When we evaluate the feedback around us, we also tend to make quick assessments of what our actions mean to us. Not all feedback is entirely accurate, but we can say for the most part, feedback becomes rather concrete. By being able to assess the information, decide whether or not it is useful to you in any way, and moving forward based entirely on your own beliefs about the feedback creates a very unique method of making decisions.

One of the most significant questions a new trader (or a growing trader) can ask him or herself is how they are currently responding to the expectations of others. When we feel as though we have to meet specific expectations that come from other people, we then ultimately are pushing ourselves directly into resentful motion. When we eventually realize that we are now moving forward based on the expectations of others, we can not feel fulfilled and we do not perform as well.
When we focus on our own expectations and we meet those as well as we can on a daily basis, we often flip our resistance to growing and producing because our motivations are more purely intentional. How does this play into the herd mentality and using the actions of the masses as informational guidance? Simple, really, but not necessarily easy.

If we check in with two other traders, ask them their opinion or their actions in reference to a particular trade, and both traders answer with a strong expectation that you are seeking their advice in order to make a decision about your own behavior then we have a simple choice to make. We can either meet their expectation, and follow their advice simply because we asked their opinion or we can meet our own expectation and use the information as just that.

You may still end up following their logic and doing the same action as they did. Or you may determine to do something a little different. Either scenario is fine. If the traders in question decide that their opinion is no longer available since they feel as though you are asking for their advice and not “listening” to it, then the problem rests within their expectations and not your decision.

It is acceptable to perform the same action as the rest of the crowd provided that you are making the decision to do so based entirely on your own perception and thought processes. When we follow our own inner voice, we are generally much more satisfied with the results, even if the results are not profitable.

About The Author

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