Become A True Professional

When it comes to trading, there is perhaps nothing truer and dearer to my heart than my love for personal development. To me this is what trading is all about, and developing your strategy is your modus operandi on your path to self-enlightenment. In trading, especially amongst the more popular education outlets, you will undoubtedly hear about how trading is 90% psychology, and how 90% of traders fail and my favorite one of all, genius is 1% inspiration and 99% perspiration. The truth is there is truth in all of these statements. These are the oft-touted statistics though, and they are also merely that, just popular pessimistic statistics with no real utility at the end of the day if we want to avoid being a statistic altogether and become an anomaly.

In order to become an anomaly though, and not simply just another trading statistic, you need to become a true professional. This is where personal development, and developing a strategy to trade, become one. They say in trading you must have a strategy or you’re just gambling and it’s true, but equally true is you must also know yourself and just what makes you tick, pun intended, if you’re to truly stick in this game.
As any proven trader worth his weight in gold will tell you, the road to trading salvation is not easy at best, and hell at worst. Often times though, the greatest challenges in life will fall under these banners. Anything worth pursuing won’t come easy after all. Trading is deceptively simple, but hellishly so. It’s a get rich quick, quicksand trap that appeals to so many but only few are truly up to the task of mastering it. That being said, don’t let the challenge deter you if you are ambitious and feel like trading is something you’d like to master. Let the record show that at one time, the great question of whether Traders were born or created was addressed famously so by the great Turtle Traders. Granted, they screened for the best available candidates, but they came from all walks of life and their results were astounding. The truth is traders can be trained, and they can be developed, and if you apply yourself correctly and throw yourself to the fire, you too can become a pro.

It’s All Mental

Trading is as much a mental exercise as it is a performance exercise. It is a discipline if you will. So to be your absolute best, you must be able to perform at your best, and to perform at your best you must know exactly how to get there. By there, I mean your peak mental flow state where you seem to slow down time and intuitively just know exactly what to do and when to do it. To give you an example of this flow state, the legendary Jesse Livermore was known to trade off simple price action, and amassed a massive fortune because he knew just what to do and when to do it because he had done it so many times. He was able to amass what would amount to a billion dollar fortune by today’s metrics, not once but twice over, while also going bankrupt twice. This also lead to his eventual suicide. Talk about a double top. Two lessons here though, one being that it pays to know price action and two, don’t go broke. To do these incredible feats of trading though, Jesse had to develop these skills through deliberate practice and repetition. Only through practice and repetition, can you develop this ability. It is worth noting as well that in the Forex Lens Trading Room we also teach price action, and no one does it better than our lead trader RP Forex. RIP Jesse Livermore.

In developing your own strategy however, there are no shortcuts. You can’t cut corners and make a square whole. Only pressure can form diamonds. You need to apply constant pressure to your craft in order to improve or you will stagnate and go nowhere. You don’t want to be a rolling stone after all, but rather you want to square the circle and do the impossible. It really does come down to hard work so don’t tell yourself otherwise. But hard work alone cannot do it in trading, for you must also learn to master yourself. This is no easy feat either. In order to master yourself, you must learn discipline, for this will be your key to freedom. It is indeed the paradox of trading that discipline is what will set you free. In my opinion, the root cause of good discipline is premeditated and concerted repetition of beneficial and strategic rituals or practices that will generate long term success, much like Jesse Livermore developed in himself. This then becomes a mental exercise in itself because only you can force yourself into developing these rituals until they become second nature habits. This is the key. You must master yourself mentally, and develop discipline.

Know Thyself To Grow Thy Wealth

This is where your personal psychology is so key. You must first know yourself in order to know how to develop strategies for your success. Ask yourself what you want to achieve and set goals. Your goals should be process oriented and not monetary. These should be based on what you naturally do well. Think in terms of what you want to be doing well repeatedly rather than simply outcomes you want. Only by doing process oriented goals repeatedly and well, will you achieve the desired outcome you seek.

It is one thing to perform well, but you must also know what you are aiming to do in terms of your strategy. In terms of developing a strategy itself, once you know yourself you can begin to try and find ways to capitalize on your personality and unique skill set. I would strongly suggest learning what you are good at personality wise, and working around this rather than trying to accommodate for you weaknesses. For instance, take into account your attention span and determine whether you want to be a short term scalper or a long term swing trader. Are you going to be a counter trend trader or are you friendly with the trend? How is your patience for instance? Are you a contrarian or a sheep or a shepherd? Are you cool, calm, collected and analytical or are you all Gung-Ho, full of piss and vinegar and ready to be reactive? Do you think fast or slow? You should be aware of both your strengths and weaknesses in order to capitalize on and avoid them respectively. Avoid swimming in the deep end if you don’t have your water wings on you and likewise if you’re a whale maybe don’t dive in the kiddie pool or you might not have enough liquidity.

Ask yourself then, what do you do best and when are you at your best? How does it feel? How did you get there? What is the best way to get there in the future and how can you implement a process to replicate it? What are the constants and what are the variables? How can you best control for variables? How can you maximize your performance? What are your risks? How can you minimize your risks? You will need to answer these questions and many others like them in order to understand how to truly optimize your performance. You will need to track these variables and many statistics of your own carefully. Indeed you will need to become obsessed with self-measurement in order to improve yourself and your performance. After all, what gets measured gets improved, always remember that. You will need to know thyself.

Lastly, once you have determined what kind of person you are, you must work to define your strategy on multiple levels. Ideally, you should have multiple iterations of your strategy, and you should be able to both expound on it at length as if it were a university dissertation you have to defend, as well as be able to distill it down to three bullet points so as to explain it to a child. Make sure it is well thought out and makes sense in the context of the markets as well as to you. For instance, don’t just say you will use the MACD to trade reversals if you can’t define what the MACD is used for. Understand the MACD and why you will employ it, if at all. Have a Why and a How answer for every basic question you can think of. Ask as many How and Why questions as you can think of. This will get you where you want to be, but you must do the actions in between. Only by asking these questions in a self-obsessed manner will you arrive at your personal truth. You will need to know whether you’re a momentum trader or a value investor after all, and how you will trade, your why’s, and what tools you will need to do your what in the end with the who and the when, right?

One great formula I have employed over the years in determining my own strategy is applying a “Set-up”, a “Filter”, and a “Follow Through” method for managing your trade – known as the STF model popularized by trading author Jacob Bernstein. This means you will trade a certain “Set-up” or market pattern that you have identified and identify with, such as wedge for example. You will apply a “Filter” such as an indicator like the MACD for example, to qualify the trade set-up. If it passes your filter, once executed you will manage your trade through a “Follow Through” system such as using a trailing stop for instance, so as to maximize profit and minimize your risk. You want to have a built in structure such as this in order to bring order to the chaos of the markets and to give you a repeatable process to practice and to judge yourself on. This simple model gives you all the ingredients you need to craft and create a simple strategy you can call your own. Once you have developed your strategy, you will need to back-test it to make sure it works, but that is another topic for another day.

As you improve with time, you will adjust your strategy accordingly as both your understanding of, and the market dynamics themselves change over time. Furthermore, you will endeavor to address any shortcomings it may have, as well as develop further strategies for different market types and conditions as you see fit. But focus on one strategy first and build it slowly. It is absolutely essential to have your bread and butter strategy that you can always rely on. A wise trader once told me, “You need an overall scheme to make money.” This is your foundation. You can’t build your dream home without your foundation, so take your time and do it right. You don’t want to build a house of cards, but you do want to build your dream home so pay attention to detail. The devil they say is always in the details.

If you would like to discuss whether trading is for you, and how you can develop a strategy that suits you and your lifestyle and personality type, then don’t hesitate to drop me a line. I love to chat with aspiring traders of all backgrounds and I would be happy to share what I know. Give me a call anytime and let’s get you rolling.

Who is Op-Ed & Forex Lens

Op-Ed is an avid trader and learner of all things life, with an inspired sense of duty to help others achieve their goals and dreams. Ed has 7 years of financial and trading experience, having both worked on the broker side, as well as prop trading and in trade support. He has also worked as a professional corporate currency trader and focuses mainly on Gold, the S&P and Forex. Ed is also interested in beginning to mentor students more formally, as he has informally over the years. He is always available to talk shop.

Call me or send me a chat now if you want to learn more about how to get started in trading!
or get started with the Forex Trading Room!