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Mark Zuckerberg shares an interesting management technique to quickly put ideas to work. Instead of waiting for his approval on a project, engineers can simply create their own apps, additions or functionalities to the Facebook platform and roll them out without any oversight. Here is the catch. Instead of rolling these new concepts out to a billion users, the initial sample set is only 10,000 or 100,000 users. If the feedback and positive (and I assume the software does not crash) Facebook rolls it out in waves until everyone has the latest widget.
So how does this apply to us as retail traders? Easy. We can mimic the FB method and benefit from its fast paced results. Suppose you have an idea for a strategy. You can spend countless hours back-testing, tweaking it and rewriting it – all of which will be chucked out the window the moment you actually make a trade in live market conditions. Instead, write out your basic rules on a piece of paper. Test them manually on a chart ( if you use software it will inevitably give you bad data unless you spend thousands of dollars cleaning up the price feed) and then “roll it out” on a small audience.
In this case, “audience” is actually your money. Just like FB doesn’t care about failing on 10,000 users, you shouldn’t care about failing on $1000.00 dollars. Trade at 0.01 size for 10 cents a pip and see if the ideas are working. If you are getting a positive response increase your “audience” step by step – as long the experience continues to improve. Ultimately, if the idea is good enough it can go into your permanent portfolio and become a key part of your “investment experience.”
By thinking of your money as “the audience” you create the proper psychological distance to evaluate your trading ideas objectively. You no longer need to “win” on every trade. Instead, can focus on improving the startegy to impress your “audience” which in the longer will be a positive experience for everyone involved.