/ Trading

Trading success can be had by all ... who practice

I can never quite get sold on Tony Robbins. Which is ironic, as I always feel getting sold is the life purpose of the man. It is probably because I am old enough that my image of Robbins is as an infomercial salesman in the 80's, not the president consulting version of today.

Despite that, there is no avoiding the man and the advice he spreads.

Whether it be via books, video, or quotes by other writers, you are bound to read something that has more than a flake or two of truth in it.

Today I came across this, and it couldn't be more relevant to the most successful, and terrible traders I know.

“One reason so few of us achieve what we truly want is that we never direct our focus; we never concentrate our power. Most people dabble their way through life, never deciding to master anything in particular.” - Tony Robbins

I would go as far as to say it is not just "one reason", it is almost "the reason" we fail at most things, including trading.

The 50/50 game that isn't

Trading is a game of 50/50 chance. On face value, half of us should at least make small amounts of money, the other half not. The zero sum game.

In reality over 70% of retail trading accounts lost money in 2014. Some would argue that number is overly optimistic.

In the modern day world of vibrating watch alerts, Miley Cyrus twerking and unlimited entertainment options, the battle for focus has never been greater.

Trading is one of the greatest, and hardest professions you can do sitting behind a desk.

Something that looks so easy, is so mind boggling frustrating that if your keyboard survives the day without being implanted into an orifice it is considered a good day.

Deliberate practice

From the book Mastery by Robert Green:

How do you best move toward mastery? To put it simply, you practice diligently, but you practice primarily for the sake of the practice itself.

Practicing diligently. In trading that can be back testing, it can be reading, it can be the act of placing a trade itself. But it must be done consistently, and it must be done with a defined purpose.

Paper trading price action? Why? Are you studying the effect of a pin bar on the following two bars? Are you testing the amount of times support can be touched before breaking? (a hint, usually three).

Perhaps you are watching for what happens after news releases. The main thing is, have a reason to practice, and do it to mine a small nugget of defined trading knowledge.

Deliberate practice.

The power of knowing

The best thing about the ideas of consistency is it does not have a time reference. It can be every day, morning, night, week or year. As long as it is repeated at roughly the same time.

Consistency builds habit, muscle memory (our brain is muscle of sort) and confidence. It is these we rely on as traders when markets move quickly, or if things go against all logic.

Sorry.

When things go against all logic.

Could the young but realize how soon they will become mere walking bundles of habits, they would give more heed to their conduct while in the plastic state - William James

How often, how large, or what you trade is less important as to how methodical you are when you do it.

Consistent, deliberate practice will build habits you can rely on, and give you the confidence in knowing why a trade wins or loses.

The knowledge of why you lost money in a trade holds with it more power than anything else in trading. If you know why you lose, you can turn that into an advantage. If you know why other traders lose. Oh boy, better get a bigger wallet.

Rarely is a good decision made when a trade is tanking, the kids are screaming and your trading account is shrinking.

Success can be learned

The good news, the evidence points to everyone having the ability to succeed with that same deliberate practice.

Outliers by Malcom Gladwell is a fantastic book where Gladwell explores the research into what it takes for people to succeed in different professions.

One study was a group of violinists in 1990's, which followed a group of students from childhood to adulthood to find what made them elite or average.

The answer. It appeared to just be practice.

Those that practiced for over 10,000 hours performed at an elite level, while those with only around 4,000 hours did less well. (and now there is a whole "10,000" hours industry)

Logical right?

But it flies in the face of the idea that some people just have a "natural talent" that allows them to perform better than others.

In this, and many many more studies, these outliers didn't exist as you would expect. If they did, there should be those that became elite, but with little practice than the others.

Do you love practice?

The elite become better by falling in love with the practice, not just the end result.

And so it needs to be with trading. Do you love trading so much that you will do it on weekends, late at night, when you are tired (actually, don't do that), hormonal or just for plain old fun?

When consistent, deliberate practice becomes fun, trading success will follow.

Happy trading.

This post took me six days to finally get out, I get the irony.