Another year has passed and this gives me the opportunity to look back on the past 12 months and get ready for the new trading year. In this article I want to explore a few principles about self-improvement, practice and developing skills that I use in my own life and I have seen other people benefit as well.
Curiosity without expectations. How to win at anything
Becoming a profitable trader can seem like such a big and overwhelming task. Especially new traders usually don’t know where to start and they can easily feel frustrated and discouraged once they get a feeling for what it takes to become better as a trader.
This was certainly true for myself when I started out and I had no idea how to make this thing work. The more I read about trading, the more I recognized how difficult this was going to be. Technical analysis, fundamental analysis, dealing with trading emotions, risk and money management, performance analysis and record keeping, intermarket correlations, macroeconomics, and on and on.
However, I also recognized that there was no way that I was going to be a successful trader within the next 12 – 24 months and I was OK with that. I shifted my expectations from wanting to make money immediately to making sure that I understood the rules of the game and lay a solid foundation – I was in it for the long game and I knew it. I focused on one task at a time and I slowly worked my way up, starting with the absolute basics and then slowly moving on to more advanced topics. The progress you can make by applying curiosity without expectations is incredible and I will talk about this more later on.
99% of all traders ‘ride the learning curve’ and hope to stumble over a system that just works from the start. Consistency is key! pic.twitter.com/wwYtTIBc0p
— Tradeciety – Rolf (@Tradeciety) October 10, 2016
But this is something I apply to all areas in my life. When I wanted to become healthier, I knew that this was not going to be an overnight project but I was OK with that. I am in my early thirties so I have 50 years ahead of me and there is no need to rush it. I made the decision to just get started by making one small change: I started running. First, it was once a week, then two times and now I run 4 times a week. Then, I felt that I wanted to do more for myself and I added a gym workout to my weekly schedule which then quickly turned into two and finally 3 workouts per week. I started looking into different types of workout routines, I read about muscle hypertrophy, muscle recovery, strength and endurance workouts and other topics. This made me realize that I needed to focus more on my nutrition and I became interested in diet and how to nourish my body the right way. After I got in good shape, I noticed that it’s not only about having a healthy body but you also need a healthy mind so I started exploring meditation which I picked up recently a few months ago. And who knows what is next…
Long story short, I didn’t start by completely changing my whole life at once which would have probably discouraged me quickly once I had realized how much work this is going to be and how little I knew. I just started by changing one little thing, which then led to another and another and I build momentum by naturally following my interest and the progress I experienced.
You don’t need to know where you are going. Just go!
Did you know that all flights are off course 99% of the time? It’s true because planes have to constantly adjust based on weather conditions, updrafts and downdrafts. However, the accuracy to which planes and pilots can predict the touchdown time is incredible, even over thousands of miles.
The point is, as long as you know where you are going, you don’t need to know the next step in advance. Just make sure that you make progress, move into the direction of your goal and pay attention to your surroundings and make constant small adjustments based on what happens to you and around you.
The conditions will never be perfect but they don’t have to be either. Just get going and throw yourself out there. You will be surprised how much you can achieve if you really want to make it happen.
[bctt tweet=”Build your own dreams, or someone else will hire you to build theirs. – Farrah Gray” username=”tradeciety”]
When I sold my possessions, quit my job and left my home country 4 years ago, I didn’t know how and if I was going to make it. However, I knew that other people had made it and I believed in myself enough to know that if I kept working hard and move into the right direction, I had a good chance to figure it out for myself. Fast-forward 4 years to today, I have not only achieved everything I set out to do, I surpassed all my goals. I had no way of knowing how I was going to make it and I made a lot of changes and adjustments along to way, but I applied curiosity without expectations to everything which helped my stay open minded and I went with the flow.
Read my full story here: The day I started traveling the world
How to make 2017 your best year as a trader
So what should you be doing now and where to start? I am a big believer of “bottom up” which is an approach where you focus on the basics first because they will lay the foundation and they also have the biggest impact on your performance and progress.
#1 The first step for every trader
If you are one of our Edgewonk users, you will know that the Tiltmeter-challenge is at the very beginning of our trader development program and it’s there for a reason. The Tiltmeter challenge challenges you to make the best trades possible and detach yourself from the outcome.
Once a trader focuses on his process, sticks to his rules and plans and practices discipline, not only will his Tiltmeter show his good trading behavior, but the money then becomes a byproduct of his good approach.
As traders, focusing on making the best trades possible without being too fixated on the outcome is the first step towards better trading.
— Edgewonk (@edgewonk) January 13, 2016
#2 Process and an understanding of your method
If you have been following me on Tradeciety, you will probably know that I am a big fan of establishing a good process. I emulated successful traders and so I do my most important work during the weekends. I do my journaling, I go through my weekly screening and market preparation process.
Every Sunday, I spend a few hours going through all my markets and I apply the same screening process to each of my 28 Forex pairs, commodities and indexes to prepare for the next trading week. I map out trading plans, write down my observations and take notes on all the details I can pick up. Whereas this is a good practice to get yourself organized, what this really does is it forces you to know your method inside out. If you are looking at charts and you don’t know what you are looking for and you don’t really know what has to happen before you are getting interested in taking a trade, it clearly signals that you don’t know your method well enough. Most traders think that they know their trading strategy but the majority never spends real quality time pouring over charts.
At the same time, I spend a lot of time going through my trading journal because it shows me objectively how I have performed and it provides a level of information, you cannot get anywhere else. Just ask yourself: do you remember your last 5, 10 or 20 trades? Of course, most traders won’t but if they don’t have a way of recording their trades, there is no chance of becoming a better trader. In trading, there is no learning by doing and a journaling and review routine are a must. It also adds to the previous point and you will get to know yourself as a trader and your trading method very intimately.
#3 Consistency for consistent profitability
Finally, I want to spend a few minutes exploring the concept of consistency. Traders all are seeking consistent profitability but, at the same time, their process and approach are all over the place. If you want to experience any kind of consistency when it comes to your results, you have to apply a consistent approach. This seems like such an obvious thing to say, but when you look at other traders, very few practice such a principle. Most people are all over the place, they constantly change methods, randomly flip through timeframes and change indicators, ask other traders for advice and have no real process. Of course, it’s impossible to achieve any kind of consistency that way.
Don’t make this mistake of believing that you first need a profitable trading strategy before you can be consistent in your action. It is the exact opposite way: first, your actions have to be consistent and then your results will be consistent as well.
Remember what I said about airplanes being off course 99% of the time!? This is also true here and although you won’t see positive results immediately, as long as you go into the right direction and just keep making small(!!!) adjustments along the way, your chances of arriving at your destination are fairly high.
Further reading: How To Become A Better Trader And Escape Trading Failure
#4 Keystone habits for traders
Establishing keystone habits is a powerful way of getting on the right track. Keystone habits are small, manageable and easily doable habits that, over time, can transform one’s life.
They (keystone habits) act as the soil from which other good habits grow – When we complete a keystone habit loop, we’re more inclined to engage in other good habits. For example, when we exercise, we’re likely to drink more water, take a vitamin, and eat healthy meals. 1
You will see immediately how this fits in to what I shared in the beginning. Once I started running, it trickled down into many other areas in my life and it started the domino effect. Running, for me, was a keystone habit which then led to establishing more and more positive habits. The most important thing is that you just must get going.
In trading, you can pick from a variety of keystone habits and I urge you to just pick ONE in the beginning. For me, it was establishing a review process which lead to journaling, performance analysis and so on.
They (keystone habits) extend small senses of victory – By completing a keystone “habit loop,” as he calls it (cue – habit – reward), we’re filled with a sense of accomplishment. It’s a small win that we can then build from, acting as the foundation for a successful day. 1
Here is my list of keystone habits for traders:
- Start a trading journal and spend 30 minutes each day journaling your trades
- Establish a Sunday screening and market preparation routine
- Go through a trade review process each week
- Use a checklist and/or a trading plan because it forces you to know your trading method intimately
More positive habits:
- Read 1 good book a month. It does not necessarily has to be trading related but should be non-fiction and expand your horizon. Here is my recommended reading list
- Listen to other successful traders’ interviews ( Market Wizards book series | Interview with Moritz from Tradeciety | Interview with Tom Dante | Interview with Peter Brandt )
- Practice discipline in money management and learn about probabilities, expectancy, and variance
- Start exercising and take care of yourself
Just pick one (maybe two at max) things from the list above and get going. You won’t see a big improvement at first but you will create momentum. Don’t waste another year and make sure that 2017 is your year where you finally start turning things around by taking trading more seriously.
And, most importantly, enjoy the process. You won’t suddenly become rich and double your account every few weeks. But you will lay a solid foundation and then, by the end of 2017, you will look back satisfied once you realize how much closer you have come to reaching your goal.
1 5 Keystone Habits to Help Supercharge Your Success: http://www.huffingtonpost.com/rl-adams/6-keystone-habits-to-help_b_8063212.html