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Day Trading: 5 Steps to Shorten Your Learning Curve
1. You have to know what you want of your life before you become a master learner. If you don’t know what your goals are or what your dream life should look like, then you won’t know WHAT to learn or, worse, you won’t be COMMITTED to truly learning something. Advanced learning requires clear focus and a definitive WHY for learning - without these, you won’t stay disciplined enough to learn anything with real depth.
Take time to envision your life as a successful trader. It is easy to envision yourself working 4 hours a day making big money as a trader. I invite you to read an article series “Faulty assumptions with Day Trading”.
Now that you have a more realistic idea of what it takes to be a successful trader, take 10 minutes with no distractions and imagine your desired life with a trading career.
2. Avoid starting from scratch. With no model to begin from - no example or strategy you are following - you’re reinventing the wheel and doomed to waste time. So, what proven framework, person, strategy, or step-by-step instruction are you following in order to learn this new area?
For 7 years I failed at trading. In hindsight, I know exactly why I had struggled for so long. I used that benefit of hindsight to develop a model to help others not only know WHAT they need to learn, but HOW to learn it. If you want to be successful, follow those that have already done the work for you.
3. Make a PRACTICE of mastering skillsets. A practice is a recurring habit or routine that deepens your skill in any given area. The important thing here is to make a daily practice of anything you truly want to learn. Without daily exposure and immersion in the area that you are trying to learn, you will never achieve mastery. Learning must be an everyday discipline.
PRACTICE PRACTICE PRACTICE. We all know that it takes practice to become skillful at something, yet many fail to apply this knowledge to trading. Traders tend to have a faulty assumption or expectation that they can trade for a couple of hours and then take the rest of the day off until the next trading session. Truthfully though, trading is a skill, and just like any skill, it takes practice. With a market replay utility and a model to help you learn faster and more efficiently, you’ll see results from your practice sessions almost immediately! All those wasted hours you spend on blogs, trading forums researching new systems, downloading free indicators, spending time doing trade room trials, could be spent practicing with intention. Knowing that your practice will definitely have a payoff at the end.
I often use sports analogies when I speak about trading. Traders need to think of trading hours as GAME TIME. Game time is not the time to try new trade setups, strategies, indicators, or trading styles. This applies even if you are trading in simulation mode (not real money but “paper trading”). If you want to try something new, do it away from game time and with a structured learning and practice program. You will be amazed at how much faster you will progress with your trading.
4. Get feedback. As you begin something new, all leaps forward, all major advancement, rests on getting immediate feedback and direction. Learning is a social process, so ask other people for suggestions and direction as you move forward so you can adjust your approach.
Become accountable for your trades. Ideally you have somebody to go over your trades with you. If you don’t, then each night go over your trades and write down what was good and what was bad. Make it visual. Do it on chart images of the trade. This means ALL TRADES: winners, losers, and those you should have taken but didn’t. I offer a mentoring program or “Rx Program” where each participant is assigned a coach. The coach never has more than 2 clients and is in constant contact with their traders. The coach reviews every single trade and sends a report with detailed information about each trade. They do this DAILY. I created this because I know how important and beneficial it is to be held accountable for your trade decisions. In fact, being accountable makes you a better trader IMMEDIATELY.
I know it’s tempting to tell yourself, “I am in SIM and I just wanted to see what would happen.” Well, you need to stop trading like that. Review every single trade you take after the trading session. You will start to see patterns that will help you become a successful trader.
5. Have a deadline. Without a timeline for developing your competencies, you’ll never act or you’ll fall off track. No deadline means guaranteed distractions. So, WHEN do you need to learn this new topic, or reach the next level of skill? What’s the consequence if you don’t learn it by then? Knowing the answer to these two questions will accelerate your learning.
Just like with trading, you need a target. Set a date, set a realistic win percentage you would like to achieve, and get to work!
Futures and forex trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones’ financial security or life style. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.
Hypothetical Performance Disclosure:
Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results achieved by any particular trading program. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading. For example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results.