Following up from the last blog post’s ending, as to contemplating and answering the question: “What do I really want?”, really wholeheartedly with a strong mental conviction and intention, you can move forward to the next step.
Just like we research universities and jobs for our education and careers, you must not be lazy in researching what to learn, how to learn and from whom to learn. You must take it seriously, like your choice of career, education, spouse, or partner… according to the importance of something, you can be dedicated and willing to push through.
Specifically for trading, in my humble opinion, first, you need a mentor. Too many times in our older years, we think we can take care of things on our own. No, you cannot. The ratio of people succeeding from self-learning online courses, books, or webinars, in anything, is 5% according to research. Maintaining consistency and carrying on is even less. If they taught trading at university, I would say go for it, I would have done it. However, though, trading is a trade, which means you are going to learn the craft mostly on the job, just like an apprentice from a master.
So, your chosen coach has to show you things under live market conditions and has to take you through a daily routine and process so you can get used to it and keep doing the reps. Here you need to understand that your coach cannot do your reps, but can guide you to what to do and how to do it and answer all the questions you have. This is crucial because questions mostly do not pop up in theory. They pop up in practice, when you get your hands dirty! So, your coach or mentor has to be available, willing, and able to give you the time with patience.
Once you have a mentor, he should clarify your knowledge, your routine, and how you plan to integrate trading into your life. Each individual is different. The knowledge can be the same for everyone, but the when, how, and why will be different for everyone’s unique needs and differing circumstances. You need solutions specifically addressing you.
Once that’s out of the way… there are three main pillars: technical analysis, money management, and trader psychology. Beyond these, you must also be mindful of your ongoing development after; such as planning ahead, sharpening your tools, modifying, and getting sharper.
The first topic on the agenda should be technical analysis. You must understand and come to apply this very proficiently. Do not be lazy. You must take your time, as long as it takes, to become very good at looking at charts.
How will you know when you are good?
When you take a look at a chart, you should come to understand direction, the levels to enter according to that direction, where to target for profit, and where to get out if you were wrong.
This requires many hours of chart reading and applying technical analysis tools with patience and observing how they are working out as the market unfolds. You must not get tired of doing this on a daily basis, just like exercising. Success will come through the reps, just like in the gym. It’s boring doing the reps every day, but it pays off and it works, it’s the same in trading! Those who do not get tired of boring work and do it will make it.
Your technical analysis should not be complicated. The better you get at something, the more practical and correct it should be. Having said that, the tools for technical analysis vary, and there is no one specific thing that will work all the time for you. So, knowing just one approach will be shallow, and knowing a lot will make it frustrating. So, you have to cherry-pick the techniques that work and make it your own practical approach. There are millions of videos on trading, millions of opinions, millions of techniques… to be honest, your guess is as good as anyone’s. Instead of watching things that will not give you value, practice what you have learned, so you can get better. There is no holy grail, but you can be great with practice and consistency.
The second thing is money management.
No matter how great your technical analysis is, you mess this up, and you are out. Having said that, if your technical analysis is weak, then this on its own will not be satisfactory. This is the shortest topic but with trading psychology together, they make up 80%.
The third leg is keeping a cool head on your shoulders. We are sensual creatures, we feel first and understand later. In order to flow above your emotions, you must build a mind that can act above it. This boils down to a few things, and you need to get them right:
1-Plan the trade; if you do not have a plan, you cannot decide logically. Your emotions will get the better of you. If you have a trade plan, then all you have to do is apply the plan and stop trying to be smarter than the logical plan you made.
2-Trade the plan; this can be more difficult than the plan itself. As I have seen many make plans but never trade them. You must have self-discipline. You do not have to trade every day. Trade only when you have a set-up.
Trading on your own can be a lonely business. Every day, our moods differ with what life throws at us. Life is unexpected, but you don’t have the luxury for unexpected trading. So, keeping your cool and trading with a systematic approach is your only way in and out.
We are the products of our environment. So, keeping trader friends around or staying close to the coach is not a bad idea. At the end of the day, we all need a friend to talk to every now and again. Some new insight or seeing things that I did not think about before will enrich my trading without the pain of living it on my flesh.
Having a good workspace, a daily exercise routine, and a daily trading routine with a support group at hand can give you a healthy mind and a body in your professional career as a trader.
At the beginning and end of every day, remind yourself why you are doing it and why you must succeed so that your intention is never lost but keeps getting stronger every day.
