Chapter 12: A Wink is as Good As a Nod To a Blind Horse

"There are few things in a child's life that allow a child to play as an adult while allowing an adult to play as a child." Phantom of the Pits

Many subjects of interest seem to intrigue Phantom on trading but seldom is there time in a person's life or career when the time to smile and have nothing but fun exists. As a child we all experienced the great fun of a Sunday afternoon filled with surprises and anticipation of newly found fun things. As an adult we often miss the point of a balanced life in most respects and none more than to take the time to be happy, regardless of the current situation.

It seems fitting that Sunday could be one of those days for traders. With electronic trading now and world markets, it is more difficult to have the old days of limited hours of trading through the week and have weekends free.

Still, Phantom wanted to give a smile upon the serious adventures of trading. Today we start with a blank sheet of paper on the so-called cheat sheet so we can convey the thoughts of fun in trading as well as respect the seriousness of the business required. We never know the road and the turn this project is taking until we come upon it. Fitting, since this is written as Phantom's view as a trader's insight into reality of trading . . . nothing more than his presentation into your thoughts in order to generate your own ideas as to what the possibilities are.

Sometimes a question of how to approach any situation can usually be reduced to a series of qualifications of one of two states before going into the next priority of thought. Phantom indicated that, as we grow older, it seems to be natural to oppose change of any kind. Because change is the one thing we can count on, we must learn to use it to our favor even more so as we grow older or we fail to grow at all. This is true in trading and is usually magnified as change takes place.

Phantom's explanation of how the opposition to change is directed was explained as a percentage of the whole. He indicated that, as a child of maybe 6 or 7, we would judge change based on our new adventures of discovery. Over the next year as a child we would grow much more than the additional year of 12.5% from age 7 to age 8 -- mainly that, in that additional year of growth as a child, we would find change an adventure of new-found knowledge and not put restrictions on ourselves.

As we grow older, say from 49 to 50, we have increased our new-found life knowledge by a smaller percentage of, say, less than 2%. Our new knowledge is now not new frontiers of adventure but more of an uncomfortable reality of unfamiliar situations. Because 98% of our known knowledge is more comfortable than the 2% of new knowledge, we tend to oppose any change created by the new knowledge for we strive for the simple, comfortable life as we grow older.

We tend to feel that our effectiveness of making changes ourselves is reduced as we grow older because the percentage of the whole of new knowledge is smaller and smaller each year.

Phantom feels when we reach the point of not caring about change any more, we have severely defeated our most powerful thought process of creativity. Creativity can enhance our ability to accomplish great things and make great trades.

One point Phantom felt about the question of change was that it is important to expand the creativity process best by doing the fun or new thing, which gives us a sense of adventure in our lives. To be young again is not a lost thought if we could decide to be young today in our thoughts and our motivation toward being creative again.

But how do we proceed with our creativeness to overcome opposition to change? Phantom is no expert on such a subject, so he feels as long as we could put a fun smile on the reader's face, it would serve to put on notice anyone who failed to come up with their own excellent ideas or their own answer.

Art Simpson (ALS): Phantom, I know that "A wink is as good as a nod to a blind horse" is one of your favorite sayings. Why is that so great a statement to you?

Phantom of the Pits (POP): My Grandpa was one of the last people to have horses for working the fields that I knew. It really wasn't that long ago, but to younger people it seems like long ago. When I was a small child, my Grandpa would take his workhorses to the field to plow. I would get to sit on the big workhorses, as they were very gentle. Being gentle horses had drawbacks, as they also were at times very stubborn. When Grandpa couldn't get them to do what was required, he would say, "A wink is as good as a nod to a blind horse."

Well, that stuck with me whenever I knew I was correct on something and couldn't convince anyone of it.

Trading is full of situations where that phrase is fitting. There are traders who are as stubborn as the horses my Grandpa had for working his fields. Still, we loved those horses until they died. We never gave up on them, and they proved to be great memories of wonderful efforts of a great team of my Grandpa and the horses.

Today if I take interest in any particular trader's view and I see that view as very narrow or perhaps close to an opinion set in cement, I will use the phrase. It is meant only to provoke thought as to all possibilities rather than leaving a narrow and fixed opinion. There are often times when it is obvious to me that the particular trader is wrong in their fixed and narrow view. I am not making a judgment that the view is wrong but that it is too narrowly based or insufficiently thought out. I will use that phrase to provoke the important re-thinking process to search out new knowledge.

ALS: You must be careful with the statement because there are traders who will immediately think they are wrong and go the other way.

POP: Yes, that is a mistake newer traders will make. To verify an order, a broker will say, "Are you sure you want to place this stop?" The trader will doubt his plan at that point and say, "No, let's hold off on that."

I don't mean to be responsible for changing a trader's mind but only to change their horizon of knowledge and thoughts. I especially will see it as an important statement when a dramatic change is starting to flag our indicators.

A common thought is, "What if I miss the move?" So what? Is there no tomorrow? Okay, you put the position on anyway and you are wrong! So what? You expect to be wrong if you are thinking and trading correctly. It is a big problem only if you don't properly protect your trade as required.

My statement is to prepare a trader for looking and being prepared to act on any possibility rather than being convinced beyond doubt.

ALS: You said we would talk and explore fun things that provoke creativity. Let's just start with being a child again and playing games on Sunday.

POP: Okay, you have given me good thoughts when you said to start being a child again. I can remember when just our family would play a game on Sunday called "Pit." I don't think many folks knew of it that many years ago, but I just recently saw a deck published in the 1920s and that brought back memories of a game that has been around for a long time. It was a game based on trading. Now that I think of it, I can take my introduction to trading back even further.

It isn't my intention to sell the game, but I know there will be a run on it now. Perhaps we should talk Futures into licensing its own version for marketing as a courtesy to their readers. The game was an exciting game then and still is today. We would get as many as four decks together and have 32 people at a time yelling and screaming. What fun that was to everyone from 6-year-olds to 80-year-olds.

By expanding the players to four decks, we were being creative. To be creative, it is easy to improve upon anything that inspires your interest. That is what we all need to do to grow, as we grow older.

ALS: Why was the game so much fun?

POP: The game was rather simple and, though not well-publicized, became an adventure of newly found fun for anyone who discovered the game. It was a deck of cards with different commodities on the face of the cards. I remember there were commodities such as hay, rye, wheat, corn, barley, oats and I believe two others. I will leave the two others out to let the readers fill in the blanks as we get them to being a child again. Each commodity had, I believe, eight cards. There was a bell like the one you would see on the counters at motels; you ring it by hitting the top of the bell.

The idea was to deal eight cards to each player, and the first player who had all eight of the same commodity would ring the bell and say they had won. At that point the game was over. Each player who had never played the game before would be shy and say this seems a bit far-fetched. As the game progressed by the rules, the shy player would start screaming the loudest.

Each player could exchange any number of their cards with any other player up to three at a time. If you had five wheat cards and were trying for all eight wheat cards, you could get rid of the other three cards based on the number of other commodity cards you had. For example, if you had two corn cards, you would yell, "Two!" Anyone else who had two cards to trade would trade with you. You wanted to trade all of your cards away except the ones you were trying to get eight of the same kind.

You wouldn't think much of this game without seeing the action it created. All the players would start screaming at once as they got into the game. I remember we had a visitor come by one day when we were playing, and they thought there could be a war going on when we were playing.

"Pit" is the closest game to true trading emotion and adventure to this day. I haven't played it for decades but still remember the fun it gave us all.

If I were a magazine or broker, I would put my advertisement on the cards and give that game to all of my clients at a discounted price. It's a fun game anyone can play within minutes of hearing the rules, and it takes less than 15 minutes for each game. We found it was the best way to bring strangers into a conversation at a new meeting or reunion.

ALS: You're going to start a run here! I am sure lots of people remember the game and would like to get a game or two.

POP: Okay, I know we have the readers thinking and being creative now. They can improve the game and the cards, as an example of showing them the nature of how being creative will overcome opposition to change.

ALS: Why don't you put your picture on the cards and call them the "Phantom of the Pits" game?

POP: Why didn't I think of that? You see, you are very creative, too! Sure, we could do that and give the game to each person who bought a book. In fact, I know you have two artists working on the trademark now.

I realize we are getting a little away from what the traders want to read. Do you think they will forgive us and understand the importance of the Sunday fun point we are trying to make?

ALS: To use your phrase, "So what?" I know you are going to cover it all eventually and interactively with the traders. How can we deny you the smile on your face as you think back as a child would and enjoy the pleasures of being creative. I know the readers and traders whom you have so much faith in are enjoying this as much as you.

POP: Yes, it is important to me. There are few things in a child's life that allow a child to play as an adult while allowing an adult to play as a child. I don't regret bringing up the game I remember best as a child. "Pit" is a game that will sharpen your awareness of your surroundings and interaction with other people without requiring much of a task on your part. Do you remember the game?

ALS: Yes, and a few others, too, more recently. I remember playing drop the clothespin in the milk bottle with a 101-year-old lady. Now, how much younger thinking can you get! If a 101-year-old can go back and enjoy the childhood memories, then why wouldn't a trader be able to understand this importance, too?

Phantom, it looks like you're on a roll here. I remember a well-known writer saying that he felt the books with less in them were sometimes better books. We certainly are giving less in this part anyway.

POP: I know whom you are talking about. I don't know whether he would want credit for that statement or not. I think I know what his point was. It was to express that it was important not to overwhelm readers with too much data, which could do more harm than good.

ALS: I think so, too. Could that be the true Phantom of the Pits who said that?

POP: You're not going to get me to admit or narrow the field, but why don't you ask yourself that question? I guess we can narrow the field, can't we? That is pretty clever on your part. By knowing who POP isn't, I guess you do narrow the field some. But why is it important anyway?

ALS: Okay, I'll drop it. I was just trying to think from the reader's point of view in asking. I am just being creative. Can you be more creative in front of a warm open fire on a cool fall day or cold winter day?

POP: Relaxed, maybe, but I think serenity sets in with comfort. That, too, is important in a trader's balanced life. I really see trading as driving a car around the Indy 500 track at 200+ and having to always be alert at every turn.

That is why it is so important to wink at a blind horse sometimes. You don't need to operate at 100%-plus all the time for you lose some sharpness that way. Come down and go a different direction on thoughts. We are kind of doing that now.

One of the ways a trader can be creative is to just pick up the newspaper on a Sunday and ask how a story they read could be expanded for more information. I like to do this, as very few times do we happen to see the followup story of something that is a question for which we want the ending answer. It is easier to research further today with the news updates on the Internet news posts. Oftentimes, we read news on different trading stories, and we must keep in mind that the view is not ours but the writer's view.

I don't want our discussion to be taken as my views but my effort to provoke traders' views and ideas.

ALS: Yeah, and I know your draft chapters are just a beginning in getting feedback to complete the process of interactive feedback so you can continue and complete each chapter. You have presented ideas, which have generated other ideas, and questions to which you want to respond for the benefit of the readers.

POP: It's part of the reason I wanted a light part in our discussion here before we get into trying to narrow down the needed answers to questions that will or already have been presented. We have many subjects yet to draft before we turn the car around.

ALS: I remember reading an article about motivational speakers recently. Do you see your insights as doing that?

POP: Not at all! Who would want to replace their own intuition of what they see as success with someone else's? It is important to have your own thoughts and ideas. You can't be someone else so why would you want to be totally guided by someone else's idea on what is best for you? Motivational speakers have a place and it is important to be motivated, but most that follow forget one of the most important truths: You are the one who motivates yourself. It must be you. As in trading, it is you who must make the trades, not someone telling you to make a trade.

I see my insights as a guide to knowledge that the trader may not have had otherwise. This always leaves open the interpretation of their own ideas and thoughts. In fact, that is what makes markets. In trading we make assumptions based on known knowledge, and we use theory to prove or disprove our expectations being correct. I am trying to take away the feeling that a trader usually has the advantage when they do not. I am trying to take away the feeling that there is no way to succeed in an unfavorable game.

My insights are not anyone's ideas but experience in my trading career. When I was in junior high school, I and the class were asked to select one of two stories to write. The first one was, "Clothes don't make the man;" the second one was, "Clothes make the man." I chose "Clothes make the man." It was the worst grade I ever got.

The teacher was biased toward clothes don't make the man. Well, I chose the one I felt would be the hardest to prove with theory and assumption. I had good arguments, and I think to this day that I did the best piece of writing in that class. The teacher had her mind made up: Anyone who chose what I chose would be wrong. "A wink is as good as a nod to a blind horse" was what I thought of the teacher's grade.

I have proven that I was right in my lifetime, and I think that story is part of my success. You see, a person must believe something and then proceed to either prove or disprove their theory. My theory proved out over the years. My theory of clothes make the man built my character and my determination that I would someday be able to prove in fact that it was, beyond theory and assumptions, true in my case. Now, that does not mean it would be true in all of the classmates' cases. This is what the teacher missed.

ALS: How did you prove you were right by fact?

POP: My assumption was that how a person feels affects their actions and reactions to situations in their lives. My main point was that someone who had good clothes and was dressed well would have a different feeling about themselves than someone who would be wearing, let's say, just shorts in important situations. The key was "important situations." Can you imagine being at a funeral in just shorts? How would you feel? Wouldn't your actions and reactions be more agreeable with your feelings if you were dressed in good clothes? Of course, they would.

My fact proof came as a parallel to that article. I considered the well-dressed person and the well-knowledgeable trader as a parallel in points of feelings. In the pits trading with good knowledge (well-dressed) I felt more confident in trading. When well-dressed in correct situations such as meetings and important events, I felt better confidence and my effectiveness was much higher. True, I am the same man, regardless of how I am dressed, but I am not the same person if I have not prepared my knowledge before I trade.

For the traders, I want to impress in their minds the same parallel. If you trade with lack of proper knowledge and behavior modification in situations the market will present you with, you are only wearing shorts at a funeral. How does that make you feel? It certainly won't say to you, "Clothes don't make the man!" It will strike you to know that being prepared properly is the same as having the proper clothes for any situation.

ALS: Okay, did you ever want to get back at that teacher?

POP: I don't think I was smart enough to know what getting back at someone even meant as a child. I had lots of stars in my eyes. I still do, for that matter. It is a waste and non-productive of time to have anger or greed or regret or fear.

ALS: How about hope?

POP: Hope and love have a place in my life. Hope must be tied to action and plans. Love is my reflection of what I have given or am willing to give.

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