A Consumer is someone who spends money to get a result, without necessarily understanding how the result is achieved.
For example, if I want a new bookshelf I might head over to Ikea and buy one. I’ll then take it home, open the package, and follow the step-by-step instructions to assemble it.
I don’t know the slightest thing about structural engineering, wood working or furniture design. All I know is that if I follow the instruction booklet, I’ll (hopefully) end up with something similar to the bookshelf I saw at the Ikea showroom.
Now although I can technically put the bookshelf together (with instructions), I don’t actually know how all of it works. I don’t know what makes a good bookshelf… and frankly, I don’t care enough to find out.
I just want a bookshelf, right now.
The Craftsman is altogether different. After years of learning and practice, he understands the subject matter at a level that few consumers can appreciate.
He knows the difference between using Cedar, Fir or Pine wood for the bookshelf. He understands the fundamentals of carpentry, can build a bookshelf from scratch, and can modify it according to his needs. He knows which part goes where, and why.
Put him in any situation, and he can come up with a customized solution.
By understanding how the different parts work individually and collectively, the Craftsman sees a variety of ways to approach a problem while the Consumer sees but one.
When the Consumer wants to store his books, he thinks about getting a new bookshelf. The Craftsman however, has the experience and expertise to consider alternatives. For example, instead of buying a new bookshelf, he may choose to convert an old cupboard into a vintage display case.
In this way, the Craftsman has access to a variety of options not available (or even known) to the Consumer.
Winning Traders Aren’t Consumers
Despite what some people may claim, you won’t start making money simply by applying an “ultimate strategy” you bought off-the-shelf.
The truth is that profitable traders don’t use a one-size-fits-all trading approach. They have an entire toolkit of strategies to employ accordingly to the situation.
The Consumer thinks: “A trend is when prices keep moving in one direction. When I see a trend, I should use a trend trading strategy.”
The Craftsman thinks: “There are different types of trends, each with its own special characteristics. I should use the appropriate trading tactics and strategies that suit the current situation.”
In this way, the Craftsman adapts to the ever-changing market situation, and is always ready to modify his trading approach accordingly.
How is he able to do this?
First, he learns the principles of how trading works, and how (and why) market prices move.
Second, he learns of various trading tactics and strategies, and their strengths and weaknesses. These are his tools.
Third, he learns of different ways to combine his tools to get the outcome he wants. He learns how to recognize what the market is doing, and how to position himself to gain a lot while risking little.
Lastly, he undergoes a cycle of practice-correction-practice. He fine-tunes his sensitivity to market price fluctuations, and gains further experience in selecting the right tools for the job at hand.
In the meantime, the Consumer continues going from shop to shop, looking at all the fancy tools he can buy that (he thinks) will make him rich.