Thinking of what to start my blog with, I’ve occasionally found the recording of a webinar, which I’ve made not so long ago for Exness company (global Forex broker). You will find the video at the end of this post.
The video is dedicated to self-development (self-coaching) in trading. At the first sight – just take a chart, and practice, practice, practice again… then repeat, until you achieve 10000 hours of experience.
It’s not so easy though. 10000 hours spent near your trading terminal may not get you close to success unless your practice is conscious and well structured.
Why does pure practice not guarantee success?
The reason is that learning is a tricky process, especially if we are talking about learning trading, where nothing is guaranteed and, sometimes, even if you do everything right, you may not gain profit.
While learning to trade, we pass through three major phases: Beginner trader, competent trader and finally, expert trader. It takes tremendous effort to transition from beginner to competent. However, I believe that almost everyone can become competent trader – it is a matter of learning working patterns, applying rigid risk management and doing more of what works. Not so easy, yet achievable.
But let’s be honest – not everyone can become an expert trader. It requires extraordinary and, mostly, unconscious skills. Every day, in the market, thousands of competent traders try to outsmart each other. But it’s expert traders who take it all.
How to structurize your trading practice?
First, you have to fix your current position on a learning curve.
Are you a beginner trader, who is just starting? If it is so, you’d better try different strategies, making small bets and writing down your results in a trading journal. The goal of this period can be better described in just accumulating experience.
It’s bottom-up approach. Idea is to start your practice not with taking somebody else’s strategy and trying to apply it. Instead, you start observing price action (or order flow, for exchange-traded products). New traders in proprietary trading firms start not with charts. They start with watching order flow – the bottom of the market structure. After several months of watching market action this way, they are given charts and switch to a new level. Their best practice is to absorb information and to accumulate experience.
Competent traders operate from a top-down perspective, which is pretty much different. They may start their day with analyzing weekly and daily charts, going lower and lower, and finally, getting to intraday charts for trade execution. Best practice of a trader in this phase is to master certain trading style. They no longer need much information, they need specific information and specific skills.
For expert traders, many skills from the previous level (level of competence) become unconscious – they do many things automatically. Yet, they still have to work on their mindset and discipline.
See more in recorded webinar below: