More importantly, what are the consequences of a new trader learning to think in a way that isn’t “right”?

While reading this may dismay the new trader, as it removes what they thought was their main source of knowledge, it will save them a lot of time and future mental anguish.

After all, if a novice trader were to start off by learning perspectives based on inaccurate or false paradigms, he or she would, at some point, have to unlearn all of it, then relearn what actually happens.

Needless to say, this process is very painful, and given our human propensity to cling to our paradigms, is one that very few traders go through, even after bankrupting multiple trading accounts.

Instead, it is best to start with a completely open mind, learning directly from trading and losing money in the markets.

Experiential learning, in other words, where new traders learn hands on about the nature of uncertainty, volatility, and risk in markets, and how all of it stands at the confluence of human psychology and economic forces.

Through this journey, they will learn which narratives and paradigms actually apply to the real world, and which do not. Consequently, they can decide for themselves how they wish to think of and approach the markets; rather than have other people do it for them.

Another way to think of this is trying to fit square pegs into round holes, where the round holes are preconceived notions, and the square pegs actual observations of market behavior.

Everyone knows that forcing square pegs to fit into round holes is an exercise in futility and frustration, and the same applies to preconceived notions of how markets are “supposed” to work.

Trying to fit market behavior into inaccurate paradigms may feel intellectually “correct”, but a trader who does so is only ever rationalizing subjective interpretations into spuriously objective facts.

While this may be harmless in the short run, over a longer period of time, failing to change one’s paradigms can easily lead to making trades based on nothing more than wishful thinking – just think of anyone who keeps shorting the USD because QE is “supposed” to devalue it. (Spoiler alert: it doesn’t)

That being said, the unfortunate truth is that the people most likely to gain any value from reading this article are those who have already gone through the process of unlearning and relearning; since it is almost impossible for human beings to seek change before they have realized that change is needed.

Such is the nature of how we learn – through painful experience, and the wisdom which we distill from it.