Trading Skills #9: Experience

Quote

There is a quote I read the other day:

“Good decisions come from experience, and experience comes from bad decisions.”

Now in trading, bad decisions cost time and money.A

And we all want to minimize it (not eliminate it.)

But how to minimize bad decisions but maximize experience?

How it applies to trading

Most common questions the presenters on our live trading room get are:

– How long before I am good at trading?

– What is the fastest way to get good at trading?

– When can I leave my job and be a full time trader.

The questions above all look at speed as the key factor in skill development.

But perhaps this is not helpful.

For example, what is the fastest way to become a brain surgeon?

In this example, speed is not the most important factor, skill is.

A common pitfall I kept falling into was when I performed badly, to suddenly doubt price action and trading in general. That I can’t do it so no one can.

That usually has a cousin called – go and find another system.

Separating my performance from the goal

– Trading is a skill I can develop

– My performance will never be as good as I would like

– Improving oneself is always valuable character development, but rarely linear.

– I can trade badly today, but still have a great day – ate healthy, helped a friend, trained my body, etc

Another angle to improve skill development

-What if skill development can be improved by sequencing of work done?

– Assume you spend time to anticipate the open / likely say structure before the open

– Assume you write down reasons for trades and results as you go so you can review after

Directions

– You day trade the opening hour / few hours (1 – 2 hours)

– You mark up your trades and all other entries / reasons and patterns you can see (20 mins)

Additional work

– You add slides into categories in your own encyclopedia (15min)

– You classify your trades entry, add on, scale in and exit as either: Strong, Weak, Mistake (10min)

– You look for examples of these (20min)

– You simulate these in Ninjatrader 8 Market Replay (30min)

– You look at your initial top down analysis for the open and ability to see day structure and see what you missed (15min)

– You identify patterns on the 15min and 60min charts and Daily chart that could have improved your ability to trade / hold longer swing entries (30mins)

Summary

– I believe the above maximizes a traders emotional attachment to the day’s work and then goes deep into the relevant areas.

– It shifts a traders “trade as much as possible” mantra into trade enough to get some emotional attachment and then use it to go deep on learning

– Rather than watching videos and then trying to put the content into the chart – take the chart and afterwards find the content.

– It would seem to a new trader that it was SLOWER to do it this way but I believe it has been the reason for my success.

Zen Trading Tech