Self Efficacy Post from StockBee

In a previous post regarding bearish blogs I mentioned one blog site that has actually taught me a new and profitable method. It is surprisingly simple and surprisingly profitable. The style is a momentum based strategy based upon earnings catalysts and the author has developed a set of tools based on profitable patterns to automate his idea flow using Telechart. Please check out StockBee and his members area is worth the cost at its relatively low price. I am not being compensated and would only recommend it if I believed in it. Pradeep Bonde wrote an excellent article on Self-Efficacy which I wish to replicate here, I recommend bookmarking or saving this somewhere and reading it often:

Life does not come with a neatly designed manual.No one gave me a manual on trading when I started out. When I did bulk of my work on Market Breadth there was no book on market breadth. I got the same help manual that you get with Telechart when I started using Telechart. In fact when I did bulk of my work on designing my trading methods, Internet was not such a big source of information.Life is much easier now, you can find so much information for fraction of effort and cost. Same thing that I figured out you can also figure out if you spend sufficient time going in to depth and peeling the layers.


This is where self efficacy becomes very critical. If you have strong perceived sense of self efficacy, you would spend your time and energy on finding solutions to your ignorance problems and overcoming inhibitors. People with strong sense of self efficacy never have inertia problem. They have intrinsic motivation.
See my earlier post on “Three most common problem faced by traders”
The three most common problems when it comes to trading profitably are:

  1. Ignorance
  2. Inhibitors
  3. Inertia

Ignorance problems can be solved by acquiring knowledge. These are easiest problems to fix. If I don’t understand something, I need a strategy to overcome my ignorance. It might be reading, attending courses/training program, researching .

For example many users of Telechart do not know how to use many functionality. That is easily fixable problem.Same is true of say IBD methodology. Many people are ignorant of how say EPS or RS rating is calculated. Or I want to lose weight but I don’t know how.

If you overcome your ignorance problem, you might encounter next set of problem.

Inhibitors are things which inhibit us from acting on our knowledge. I know IBD 200 works and how it works and it can be profitable, but I do not have time to input the 200 stocks. Or I know how I can make money trading Double Trouble, but i do not have software to do this for me.
I want to lose weight , but my job commitments do not give me time to go to gym.

All inhibitors kind of problem require innovation . A little innovation and resourcefulness can solve most inhibitors kind of issues. If A route or scan does not work, you find B route or plan B. When faced with constrains, you have to innovate.

If you are motivated enough trader, you will find solving the ignorance and inhibitors problem is not very difficult. The third set of problem is the most difficult to solve.

Inertia is lack of action on what we know and inability to act on overcoming inhibitors. Inertia makes most people stick to their current orbit of success or performance. You can spend years living suboptimal life and wasting your potential if inertia is your problem.

Inertia problems have one simple solution. A kick in the ass.

To overcome all three you need to have higher perceived self efficacy. If you have that then you will find several ways to overcome your ignorance problem. If you have that you will innovate around the inhibitors and if you have that motivation will not be a problem.
The concept of self efficacy is applicable not only to trading but to everything else in your life and career. You will see same thing in organisation, the vast majority is waiting for “the manual”, “the instructions”, “the rules” , “the holy grail” and so on. Few people in any organisation will have the self efficacy to figure out many of the things themselves and they will be the real leaders. The concept of self efficacy is very critical if you have kids and you want them to be successful in life. Much of the school system and learning tools used are not geared to developing self efficacy. Plus parents are so indulgent that they hinder self efficacy development. Kids get rewarded for little efforts.
My interest in this concept of self efficacy started with my previous career. In my previous career I spent lot of time training managers, sales people, MBA students and I designed my training material and courses to enhance participants sense of perceived self efficacy. Because if you enhance it, they no more need more and frequent training.  I am also currently interested in this topic as I have a 7 year old daughter and I am trying to enhance her sense of perceived self efficacy.
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~ by largecaptrader on September 15, 2009.

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