September 13, 2024
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Trading Is A Skill Based Activity
The one thing that many traders seem to forget is that trading is a skill based endeavor. Just like riding a bike, driving a car, or learning a martial art. While some people may pick things up faster than others, that doesn’t necessarily limit them from achieving mastery or at least a high level of proficiency and aptitude for a particular skill set.
Remember the first time you got behind the wheel of a car? You’re in control of a 2-3000lbs death machine, and for some new drivers that can be really terrifying. But does the fear of hitting something stop them from practicing in a parking lot or quiet roads to build up their skills so they can eventually drive on regular roads with traffic and pedestrians? Nope.
Like any skill, it’s important to remind yourself that when starting out, your subconscious is completely untrained, so you can’t expect to be competent yet. You’re consciously and deliberately doing each action because you lack the muscle memory to do the thing. If it’s driving a car that means you’re actively thinking about controlling the accelerator, shifting gears, being ready to hit the brakes, and constantly checking your mirrors and surroundings. However, with enough practice you’ll be able to drive without consciously doing all of the actions, and driving will be so second nature that you can do things like eat with one hand holding your food and the other steering the car.
What Does Trading Have To Do With Practicing Martial Arts?
I recently had a conversation with one of my students about how trading is a lot like learning a martial art. It doesn’t matter if it’s Boxing, Muay Thai, Brazilian jiu-jitsu, Judo, or MMA, you can’t expect to be a proficient fighter after one day of training. Just like you can’t expect to be a profitable trader in your first week of trading.
Before you even hop into something like sparring (practice fighting with a partner), you’ll need to learn the basics of how to punch, kick, and defend against your opponents attacks. It can actually take weeks or even months to learn how to effectively and efficiently throw a punch or kick with good form. It can take even longer to develop good accuracy and build up your power.
Then you have to consider conditioning your body and building up your cardio so you can fight for longer without gassing out, and start employing more advanced techniques like parrying or feints to trick your opponent and create opportunities to actually land your attacks.
Developing the skill to be able to just land multiple punches and kicks in a fight without over-exposing yourself to being hit yourself is just like developing the skill to be able to maintain good risk management (defense), recognize valid trade setups (find openings), execute without hesitation (hitting with intent to do damage)–and over a series of trades turn a profit (hurt, disable, or put your opponent into submission).
The Importance of Taking A Step Back And Being Patient As You Build Your Trading Skills Up
Just like you wouldn’t beat yourself up for a subpar performance in a light sparring match against someone with months or years of experience over you, you shouldn’t beat yourself up if you’re taking losses as you attempt to learn to trade a new trading strategy.
Setting expectations can be the difference between getting frustrated and giving up prematurely, or bringing the attitude you’ll need to persevere through those initial losing streaks. You need to build the subconscious ability to recognize and execute good trades as they come.
The Role of Using Intuition In Your Trading
It’s not enough to just find trades and hit them. If it were that easy, everyone would be a profitable trader. It’s important to also utilize your intuition so that you get into the flow of trading and are able to analyze, identify opportunities, and execute with little to no mental effort.
When you’re new to trading a strategy, you’re going to second guess your analysis because you haven’t spent enough time building experience in trading the strategy in the live market. Understanding a strategy on the surface is one thing, but understanding how to apply the strategy to generate profits in the market, with all of its nuances, is what separates profitable traders from the rest of the pack.
As you develop your “seat time” in the market, you’ll know what to do without giving it a second thought. You’ll do markups, analyze the market, see the trade set up and hit it all in one motion. And that, my friends, is the pinnacle of good trading. Fearless execution and trust- in both yourself and your abilities.
Some Practical Takeaways
It’s going to feel difficult at the start, potentially even frustrating or demoralizing when your trading skills are in their infancy, especially when you’re taking losses as a result of misreading or improperly applying the trading system. Accepting losses is just a part of the process of learning. Don’t let anyone tell you otherwise.
However, if you come into trading expecting these things from the start, just like a newbie martial arts practitioner, should expect to suck in the beginning, It can be a world of difference for your overall morale and will help you get over the initial dip (challenge) of learning a new strategy, before eventually building your experience, aptitude, and trading skills up to a point where you’re making money with ease.
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