Today I want to consider the subject of over-trading. This can take two forms:
- Frequency of trading: we over trade when we take trades in breach of our strategy.
- The amount at risk relative to our capital: we over trade when the size of our position threatens risk of ruin.
Frequency of trading assumes that firstly we have some sort of strategy and that you have have developed some rules to implement that strategy. And, secondly, we execute trades in breach of those rules – we take trades not within our rules. (more…)
In everything you do, you’ll find yourself confronted with a standard ladder of mastery. Trading is no exception. The 4 levels are:
• Unconscious Incompetent – when you have no knowledge and no experience
• Conscious Incompetent – you achieve this level once you’ve gathered some bit of knowledge, and can now recognize you still have a lot to learn and experience.
• Conscious Competent – when you have the knowledge and know how to use it, at this point you are starting to see great progress and results.
• Unconscious Competent – The last level of mastery at which point you perform the task with a crystallized behaviour and you no longer think about it, you just do it right and comfortably well.