Finding An Edge in Life

Perhaps the most puzzling thing in my Temporal Spatial Arbitrage post was the idea of having a trading edge in life. That may be a great idea, but if all decisions in life are considered trades what on earth would an edge even be?

Reading the literature on success one could reasonably conclude that self-control, perseverance, and focusing on the process are the recipe for achieving goals. As far as that goes, I agree. It’s hard to get very far at anything without those qualities. But none of them have much to offer when it comes selecting what trades to make in life. Without some other elements, achieving what everyone else does, in largely the same ways they do, will be the most likely achievement. Why? Because your direction will be set by others, by societal custom, social expectations and pressures. Unfortunately, the odds of that being ideal for you – or of finding a shortcut to where you want to be by going along with that – are rather slim.

What else do you need? I think these are the main qualities that contribute to having an edge in Temporal Spatial Arbitrage, all interrelated:

  1. Self Knowledge. One of the biggest problems humans have is that we are very poor at predicting our emotional responses to future situations. Operating with faulty assumptions about how we will feel, we often reach our promised land only to find it wasn’t worth the trip. The better you know yourself the more likely you are to make the right choices for that future you. Yet no matter how well you know yourself, asking friends and family what outcome would most suit you will still very often be a better predictor than your own opinion.
  2. Adaptability. When the environment in which you’re operating changes, you’re able to quickly jettison your baggage and go with the flow. It may not provoke much envy but the less income you need, the more options you have, and more options equals greater adaptability. Minimalism can be very helpful, particularly since it often means less debt, plus it helps decrease your daily mental load.
  3. Independent thought. If you aren’t comfortable going your own way, it’s almost impossible to optimize your life. It’s tempting to call it being contrarian but too often that’s seen as going against the crowd regardless the situation. Truly independent thought is only intermittently divergent. Certainly, fitting with your personal ecology is important to a good life (see here), but that should influence implementation more than direction.
  4. Ability to vary perspective. Ideas precede actions. Therefore, significant change can’t happen without first seeing something in a new way. Creativity is only part of it. If the way you look at things is similar to other people, you will be condemned to following in their footsteps, albeit loosely, no matter how many new ideas you can generate. In the same way as forcing a smile can make you feel happier, changing perspective can be as simple as sitting in a different chair, facing a different direction when you think about a problem.
  5. Self Confidence. Every person is unique in the universe, so creating the ideal life requires going into uncharted territory to at least some degree. This necessity is much easier to embrace if you have confidence that no matter what happens you’ll find a way to make it work. Sadly, for some people this confidence will be misplaced. Happily, that number is far lower than an opinion poll would indicate. Experience is generally the best path to confidence, but don’t forget humans didn’t get this far without a remarkable ability to cope with disasters large and small – and often self-inflicted – so failure is nothing new and most often survivable.

Unfortunately, it’s not as simple as having the pieces and, voilà, everything changes. The qualities above are somewhat circular: Significant self-directed life changes aren’t going to happen without them, but if you don’t already have them to some degree the odds are low that opportunities for change will be identified in the first place.

Learning to be a successful trader certainly helps. Trading in the markets is a mirror of your inner mental life. Learning that the battle is with yourself rather than with the market is a major milestone in any trading career, and one which can have a multitude of positive spillover effects. Even if you decide it’s not what you like doing, or never make much money, it alters how you see the world and yourself, and improves the ability to find new opportunities in new places.

Ultimately, I think some sort of trigger is needed to crystallize all the pieces into a new world view. What that trigger could be for a particular person can’t be predicted or prescribed, but given time life is almost certain to present a suitable crisis for those on the verge. In the meantime, act like a two-year old and always ask why. It gets irritating when they do it, in part because they frequently succeed in demonstrating you really don’t know what you’re talking about, so avoid their noise and smell and provide that service to yourself. It’s shocking to discover how often you don’t know what you’re talking about regarding your life, and how much of what you do has been adopted unexamined.

Why do you need that job? That person in your life? Why do you need to spend your time doing that? Even if you are the hyper-analytical type, thinking you have all the questions answered, with a 10 year spreadsheet full of variables and assumptions for inflation, income, expenses, taxation, and a target retirement income (and I’m not admitting anything), it’s the unstated, unquestioned assumptions that will be the killers. For spreadsheet gal, can you truly stand getting out of bed each day, doing what needs to be done, where it needs to be done, to hit the needed numbers, when the entire exercise is motivated by the desire to escape from that grind to retirement as soon as possible? Probably not. Then there’s the idea of retirement; that hazy, unspecified paradise that awaits somewhere beyond the world you currently inhabit. Perhaps you should start asking a few questions about that too…

Why? Because I said so.

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