How can you improve your stock trading skills? Tony Swartz’s article Six Keys to Being Excellent at Anything, which I read yesterday, provoked this question. I linked to the story in my following THINKING TRADER piece, which will be published on Friday, and also supposed to build on it because it was such a thought-provoking piece. After all, according to Mr. Swartz, the keys can be utilized for anything.
What Are The Implications Of These Six Keys For Stock Trading?
- Pursue your passions. I did write about how I’m completely enamored with the stock exchange. Apart from being in love is having a strong attachment to someone or something else, in this instance the stock market. Passion “fuels focus, perseverance, and persistence,” according to Swartz. I won’t talk about you, but I feel these are key characteristics of a profitable stock trader, and they all stem from a strong desire to succeed.
- Start with the most difficult task. In pursuit of their main goal, which is to be the finest they can be even as pushing via uncomfortable situations, the best performers in either field delay immediate satisfaction. Choosing a loss target is the most difficult task for me. I am convinced that the best traders decide where they will take a loss before deciding where they will make money. It’s hard to know how much you’re ready to lose before considering the immediate gratification of increasing your bank account balance. But it must be that way. Take the loss and forego the immediate gratification of money in exchange for a long life of income.
- Intensive practice is required. “It appears that ninety minutes is the maximum amount of time in which we can devote our full attention to any given activity.” Athletes and musicians in specific must practice diligently every day, although there are restrictions to this and the need for proper rest. So, how would that relate to traders? I trade off larger charts, like the daily/weekly, as well as one intraday chart, and this allows me to devote more time to other activities, including writing this blog. For someone else, like day traders, spending time away from the charts to recharge the batteries is just as important. I’m quite certain most of you would concur that taking a break from the charts allows us to see them more clearly when we return. Trade with zeal, but take a break. When you return, the market will be open. I’ll keep my word.
- Seek advice from an expert. “The more straightforward and accurate the feedback, the better prepared you are to make changes.” This is where concentration comes into play. By paying enough attention to feedback, the best traders have discovered what works for them. Where can a trader go to get feedback? In the top list. The best traders concentrate on a single pattern or market and master it to the point where they can manage the winners and losers. This is like a golfer who realizes why he hangs a ball through into the woods because he recognizes his tilt. Because he moves the same way every time, he knows what’s going wrong in his swing. A broker who consistently trades that very same strategy understands what to check for while handling a position. A trader who switches trading strategies as frequently as she changes her outfits will not be able to tell what works and what doesn’t. Doing the same stuff over and over again is the foundation of good feedback.
- Relax to renew yourself. “Relaxing after a period of intense effort allows you to not only help revive, but also to ingest and incorporate what you’ve learned. The motor cortex also becomes more powerful during rest, which can lead to innovative developments.” What are your responsibilities when the trading day is over? Do you want to spend another three hours studying charts? Do you keep a journal? Why don’t you just walk away? I am the entire world worst at wanting to stay in the office, which is just down the hall from the living room, but I long ago realized that having to walk out of the office can be just as reassuring as walking into it.
- Make practice a ritual. “The best way to ensure that you complete difficult tasks is to cognize them — create specific, inviolable times when you do them so that you can do them without wasting energy worrying about them over time.” It’s preferable to get ready for trading before the market continues or early in the evening after quite a vacation well after closing. Preparation is the foundation for execution. The execution will be a breeze if you have properly prepared for the battle. Remember, trading is a form of warfare, so arm yourself.
It will take a lot of effort to excel at trading, but we all know that anything truly worthwhile requires a sacrifice of one thing for another. “If you’d rather be truly successful at anything, you’ll have to push yourself above your comfort bubble and deal with irritation, difficulty, setbacks, and failures,” says the author. According to Mr. Swartz. That is true if you want to keep improving or even sustain a high standard of excellence. Being extremely good at something you’ve earned with your hard graft can be extremely rewarding.”
Now let us all go and work on improving our skills.