It is important to view knowledge as sort of a semantic tree-make sure you understand the fundamental principles. In a tree, these are the trunk and big branches before you get into the leaves, or there is nothing for them to hang on-Elon Musk”
This quote is my guide when I want to learn something. I learnt it a few months ago and it gave me such a great frame of reference whenever I did not know how to go into something. That is exactly what happened two weeks ago when I was asked to write about Forex. My best experience with Forex was when I was in Rwanda and trying to pay a cab driver in Kenyan shillings. While in a hurry to get to a conference delegate’s bus that was about to leave me. As you can tell that was tough. So let’s say I met Elon Musk on the way to the conference and he chose to teach me Forex. Why would I, like you, stop to listen?
Well, he founded Paypal, Space X and Tesla Motors within a space of 4 years. Meaning that he moved from business services programming to aerospace engineering and finally to automotive engineering in 4 years. Three very separate industries that need very separate skill-sets and knowledge. The man is a rapid learner. Something we all need to be with the information overwhelm of today’s age. That combined with the fact that from his experience it’s clear to see the more you know the more value you can create.
THE LEARNING PRINCIPLE
When considering learning something, with the concept of the semantic tree as your guide, you should ask yourself am I learning at leaf level or at trunk level? In the example of Forex, you are learning at the leaf level, as you will be focusing on one aspect of investing. Which may not tell you much about the money other types of investing; cash and commodities, bonds and securities, investment funds, the stock market, retirement plans, and real estate.
The challenge with leaf-level understanding is that it does not give you on a first-hand basis comparative analysis. It would not be able to compare the different rates of return you could get from the separate types of investment. This might be crucial since you might either chose to go into an investment with an annual rate of return of 2% rather than one of 7 % per annum. In fact, you might also realize that with your capital base you may not be able to invest in the 7% one and the one that will suit you at this very moment is the 2% one due to the lower barriers of entry.
As a result, you need to always scope out and ask yourself am I focused on a type of investment? If so, have I understood all the other types of investment? To see what suits me? Such that when you land on the leaf written Forex in the Investment tree you are in the right place. Why? Cause you have understood all the branches and the leaves and taken the path that suits you the most. You have not taken the path that you have heard about the most, which is what we tend to do.
As you go lower upon the tree, you realize that the trunk is the crucial thing. You actually start wanting to understand the principles of investments. So that you have a great guide to know whether Forex trading is a dry leaf (a poor return on investment) or a life filled leaf ( a great return on investment).
The beautiful thing about this way of thinking is that it has no quick returns. Quick returns are always a sign of being hoodwinked. The other thing is that it leads to an appreciation of the entire field. You understand when to invest in this and when to invest in that. You are more insightful hence you have more control. Such that 1$ in your hands is more valuable than in any other person’s hand.
The second concept that Elon Musk would teach you would be to connect learning’s from different trees. Once you understand the tree of investment how can you connect it for example to the tree of self? How can you connect it to the language or areas of interest that you have acquired over time?
How do we do this? If you were to research at this very moment about Forex one of the first vocabulary you will interact with is base and quote currency. Where the base currency is the currency whose value you are accessing or intend to trade relative to the other. Let’s say USD/KEN is 100, meaning that 1$ can be sold to acquire 100 Kenya Shillings. Since this jargon is new to you, how can you use the tree connector concept to support you? Think of base, being home, don’t we always say home base? Then think of quote being a quotation, don’t we always use this language to denote what we want? So if you are a tourist you are quoting that you want 100 Kenya Shillings from your home base currency of 1$.
Why is this manner of thinking important? It supports encoding short term memory into long term memory. Another great example of the connecting trees concept, works when you are given a set of numbers to remember randomly. If I read out two, zero, three, zero, one, nine, six and four. How likely are you to remember those words in quick rapid fashion? If you are like the average human being you will struggle to have more than 7 numbers in your short-term history. Then when I tell you that there are people who can remember 160 numbers said to them in repeated succession with a second between each, you will probably get a headache. How do they remember all those numbers? Well, they connect the numbers to birthdays, to events, to marathon run times, etc. So my example would be Kenya’s famed vision 2030 and Kenya’s date of independence. Things I can’t forget. Which then help me to remember the 8 digits.
The same thing applies to learning something new. Connect the jargon. All the new vocabulary you need to understand so that you are able to quickly understand and map out this landscape from what you know. Once it stops feeling foreign, and Forex can be very much guilty of this, you will enjoy understanding the semantic tree. Keywords will bring a smile to your face.
Your takeaway? Learn Forex like Elon Musk would, not by focusing on leaf level understanding but trunk level information. Don’t focus on Forex, focus on understanding the principles of investing and then move to forex. Connect the tree of investment with familiar concepts. That way, though the learning will take time, it won’t be difficult. Why? You will smile as familiarity of connecting trees reminds you of things. You will feel happy to know that very few people can make more from a dollar than you!