One of the great romantic notions of striking out and starting your own business is the classic “Burn The Ship” story.
Apparently (and there is some dispute about this), when Spanish Conquistador Hernando Cortez landed in Mexico, one of the first orders to his men was to burn the ships. Cortez was committed to his mission and did not want to allow himself or his men the option of going back to Spain. By removing this option, Cortez and his men were forced to focus on how they could make the mission successful.
I’m surprised at the number of people who start a trading career and take the same approach.
I’m even more surprised that right thinking people would recommend this!
How does this apply to starting out in the trading business?
The budding full time trader builds up a bank of three months, six months, 12 months and plans to dedicate themselves to starting a trading business from scratch.
This next sentence is not going to make me popular…
It never works.
Okay, I’ve never seen it work. I’m sure you can point me to a dozen examples of where someone has metaphorically “burned the ships” and started a new life.
However, in 20+ years of doing this, and seeing thousands of traders start, I’ve never seen it work once.
After speaking to many “burn” victims, I have a theory why it doesn’t work.
Before I look at the theory…
I have reviewed many examples of traders. Guess what – in every case the person who creates the successful trading business was working on something else (and being paid!) when they came up with the trading as a business idea.
Steve Jobs was working at Atari, Woz, an engineer at Hewlett-Packard. The founders of YouTube were working at PayPal. Dell was created as a sideline in a college dorm room.
It dawned on me, all these ideas which eventually became new businesses were generated while the person was doing something else.
What about people who open cafe’s? Don’t they “burn the ships”? I would argue no.
The idea to start a cafe, the saving up and getting of loans and all the other horror involved in opening a cafe are done while doing something else. A person with no income cannot suddenly decide tomorrow to open a cafe.
I have racked my brain to come up with one successful trader that has started from a “Burn the Ship” scenario.
I can think of none.
Back to my theory.
To explain my pop theory I have to reach back to my year eight social sciences class and discuss (and without a doubt, butcher) the concept of Maslow’s hierarchy of needs.
Maslow’s hierarchy of needs is often portrayed in the shape of a pyramid, with the largest and most fundamental levels of needs at the bottom, and the need for self-actualization at the top.
The most fundamental and basic four layers of the pyramid contain what Maslow called “deficiency needs” or “d-needs”: esteem, friendship and love, security, and physical needs. With the exception of the most fundamental (physiological) needs, if these “deficiency needs” are not met, the body gives no physical indication but the individual feels anxious and tense. Maslow’s theory suggests that the most basic level of needs “must be met before the individual will strongly desire (or focus motivation upon) the secondary or higher level needs.” Like, starting a trading business…
Stay with me, I’ll bring this all home…
Let me explain how the average “burning the ships” scenario goes. Sadly, I have seen this too many times…
Jane Smith does a brilliant job, and saves up a bank of six months worth of food, rent and utility bills. She’s been dreaming of the day she can finally chuck everything and focus solely on trading as a business.
Once she’s free of working “for the man” she can finally begin trading full-time, she is sure this is the missing link.
Mistake 1- “no idea, no research, no mentor.”
The first two months of this ambitious “Burn The Ships” project are fantastic. Jane watches all the webinars, clears google reader everyday, finally gets to study all of the courses sitting on the shelf. It’s a brilliant time.
For some reason, one thing doesn’t happen, a massive amount of testing. There is a revelling in the new found freedom and lifestyle of being a professional trader but very little testing.
The first signs of trouble typically happen just before the half way mark. Jane can’t believe it was just eight weeks when she stuck it to the man quiting her job. She only has four months to go. It’s time to buckle down, and really starting to take action. “I better get to testing that Duane is always rabbiting on about.”
Mistake 2 – Getting Educated Takes 2 months.
While Jane goes through the process of trying to get educated she starts to research phrases and markets. She’s still calm, and purpose driven at this point. This is the high point of productivity in the burning ships project.
Hitting the halfway mark, always causes a reflective moment.
All of a sudden, from out of the blue, there are less days of this ambitious project than what has already been. The majority of this crazy adventure is already over! We are on the downhill slope.
This is where things really go “Jersey Shore”.
Time at this point seems to go so fast. Trades don’t work out, things go wrong, the wheels start to fall off the wagon.
Most crucially, the money is running out and those very real-world obligations are starting to invade in your subconscious and conscience. These are dark days. It’s not pretty.
It’s at this point, ” Burn The Ships” turns into something far worse – we see another failed approach – the Hail Mary.
Jane gets increasingly desperate to make something happen. She tries to force the result. She tests strategies that previously wouldn’t have cut the mustard. She realises she’s dropped off on the consistency trading requires, tried to do it herself because she doesn’t have the time or the money to find a mentor. It becomes a vicious spiral. Sloppy research, sloppy risk management, reaching for ideas and inspiration, cursing every person and idea leading her down this path.
Trading doesn’t work. It’s all a scam.
At this point, Jane is joined by another group of people we often see. The “I’ve got 30 days until declared bankrupt” crowd. Please, read this carefully. I have enormous sympathy for people in this situation. It’s heartbreaking.
At this point people need a lottery win. It’s just not going to happen.
I’ve never seen a Hail Mary work. I’ve never seen a “Burn The Ships” project work.
If you think you can start any new endeavour with the threat of losing your house over your head – you can’t. According to Maslow, it’s just not going to work.
I concur, I’ve NEVER seen it work.
Unless you’ve got the basics of food and shelter sorted and a break from the relentless calls of the credit card companies that gave you the easy credit in the first place…
You’re not in any state, to start trading.
Sorry. That’s just the way it is.
This is why those last couple of months in “Burn The Ship” projects are so dreadful. Heart renderingly horrific. You may not be losing your house, but subconsciously, you’re having exactly the same battle.
So what do you do?
If you are falling down a steep hill, heading towards a cliff, the worst thing you can do is try to keep yourself upright.
In trying to stand up, you can’t use the friction of your body on the hill to slow down.
The correct thing to do is fall down and use the friction of your entire body to slow your decent.
If you’re in financial crisis in the last month of a “burn the ships” project, you need to fall down. Take all that energy you are using trying to “stand up” and channel it in to solving the issues at hand. If you don’t have the foundation of Maslow’s pyramid right, you don’t have a chance.
Every ounce of your creative and entrepreneurial spirit needs to be focused into solving the problem and establishing a foundation of your pyramid.
Then, and only then, will you be able to start looking at ideas. (By the way, you start practicing first – then the ideas come – not the other way around…)
Trust me, there is some good news here.
There’s never been a better time in history to use a different strategy to “Burn The Ships and “Hail Mary”.
I call it “Paid to Train”.
Rather than take a job stacking shelves at Kmart or being the sandwich artist at your local Subway (And I salute the people doing this work – I’m just saying if your reading this you have a better option), you are being “Paid to Train”. You’re honing your skills while getting some money.
You’re being paid to develop and hone your skills. You’re also getting some income and building the crucial first and second steps of Maslow’s pyramid.
I know many of you reading this are contemplating “Burn the ships” projects.
I’m sure you’ve LOVED this article!
My advice, gradually reduce your hours at work, concentrate on getting mentored by us and use those vital critical focus time segments to train and hone your trading skills.
This is a process, I see work again and again.
There is a massive difference between watching an ever dwindling bank slowly go down and being safe in the knowledge enough income to eat and sleep is coming in each month.
The path to success in trading is paved by continuously doing the processes required to be a success.
There’s no gold medal without daily intensive training. There’s no trading success without proper research, implementation of strategies and the proper use of risk management techniques.
These are not things to be rushed. The best ideas and the best results always come from working a process. Just as the gold medal only comes from constant training, a successful trader comes from constant work.
There is no inspiration, no golden ticket, no “Road to Damascus” moment.
There are certainly no Hail Mary’s.
Fortunately for you (and Jane), there’s an alternative.