The path from "zero" to "Top Investor" requires knowledge of how our brain learns the fastest. This is part of the knowledge of the path of success in trading.
The best traders started from scratch - they knew nothing. One of the critical moments of their development was when they began to understand the system. It was often preceded by various events, moments of resignation, discouragement, parting ways with the market and subsequent returns.
Many trading systems are based on recognizing formations (price and candlestick), recognizing signals from indicators. In other words - you need to see a certain number of examples to be able to correctly identify signals when they will draw in real time in the market.
Usually this process goes as follows:
If you want to speed up this process as much as possible - then know that the fastest to develop (and the fastest to reach the level of independent, correct identification) are people who have seen a lot of examples.
When you look at the perspective of what I wrote - it's pretty obvious, right?
If so, why do 90% of books describing systems contain only a few or a dozen graphic examples? I have seen 120 or so such books. The pinnacle of modesty was one (about a fairly popular system), which contained only nine screenshots. Nine!
With such a number of examples, do you think you can learn anything enough to risk your money on this system? I'm sure you won't.
No one can succeed in this way. Our brain needs to see a lot of examples - preferably in the most market-like conditions. Only then will it correctly solve the tasks posed by the market situation.
This is simply how our brain works, and if we want to follow the path of development quickly, we should respect these laws.
Introduction to rapid learning of systems
Imagine that you have a system and you know it very well. It is easy to understand and apply. The signals are clear. Their identification leaves no doubt. As a result, trading becomes simpler and more rewarding for you.
Every day when you sit down to trade you have at hand a document in which you have briefly written down the next steps of analysis you perform on the market before taking a position. This document is called "Market Analysis."
On the second sheet, "List of trades," you have written down the set-ups you trade. Your market activity boils down to doing some simple analysis and then setting an alert and waiting for one of the setups to be drawn.
If you had any doubts you still have another powerful document at your disposal - detailed descriptions and analyses of 100+ signals, which you can always refer to in case of even slight doubts. "System Manual.
You look at the market from a long perspective, if even one, two or three entries do not pay, the next ones will more than make a profit. You are not in a hurry, you have a plan that you follow without haste. Looking at the growing account you begin to realize that your earlier dreams were too modest, you will be able to afford more.
Nice description of your possible future, right? Then let's make it a reality.
I described above three documents: "Market Analysis", " List of Trades" and "System Manual". And here is the easiest way to get into possession of such:
1. if you are lucky - you will get such documents from someone who teaches you the system. However, this is rare. In most cases you will not have them for two reasons:
Step 0.
Take a book or training on the system you have. Perhaps you are already a more experienced trader and have a system "in your head" and it is, for example, a modified version of some other system. In this case, the preparation of the mentioned documents will give you a lot: it will clearly reduce the stress before and during the trading and will clearly increase your profits.
Step 1.
Analysis. If your system requires you to analyze markets before entering - list one by one what you are analyzing and how. Strive to make the criteria you use objective. Example "is condition X met or not".
Entries. Write down all the types of entries your system has. If it is an indicator system and you have one type = signal from the system, describe exactly what should point to which indicator.
Fundamentals. If the system requires some additional situation, for example, some information about the instrument ("fundamental" data) then write that down too. What information is needed, what values the fundamental indicators must take.
Position management rules. Write down the rules for entries, position management and exits.
Itd.
Note what the goal here is: I would like you to have a complete description of OBJECTIVE criteria for entries, position management and exits. So that nothing will depend on your mood, your vision, or your "intuition".
Having such detailed descriptions - you will know at any time:
This is very important, because if you enter the market with money and emotions are turned on - you will be compounding losses and cutting profits, as most beginners do (why they do this I will describe later). And you have NO CHANCE of achieving success.
With money in the market and under pressure - if you don't have objective, independent criteria, your decisions will be bad and it's only a matter of time when someone will take your money away from you.
Step 2.
Once you have the rules of analysis written down (the first sheet) and entries, exits and position management (the next pages, 2-3 at most) then analyze about 30 historical signals.
1 "Reverse" the market on your platform, for example, by a few months.
2. Open the platform with news from the markets of that day. If you have not taken them into account before - add what you do when the strongest movements/news are approaching (most day traders pull back from the market then).
3. Analyze the market according to your documents.
4. Take screenshots of entry and exit signals.
5. Answer the questions:
a. What readings did the indicators have?
b. What did the set-ups look like?
c. Where exactly did we enter the market?
d. At which point did we exit?
e. What did the indicators look like at the time you managed the position?
6. Make notes of your observations in an additional section "What I learned today".
If you do 2 analyses a day according to your written rules, in 30 days you will have as many as 60, and that's a lot - your understanding of how the system works will be very good.
There are two types of investors in the world, those who make money and those who are providers of capital to the market. If you put work into your education you have a good chance to be in the first group, if not - you will definitely be in the second.
The best traders started from scratch - they knew nothing. One of the critical moments of their development was when they began to understand the system. It was often preceded by various events, moments of resignation, discouragement, parting ways with the market and subsequent returns.
Many trading systems are based on recognizing formations (price and candlestick), recognizing signals from indicators. In other words - you need to see a certain number of examples to be able to correctly identify signals when they will draw in real time in the market.
Usually this process goes as follows:
- observation on the historical chart, when we see the signal and the subsequent course of the movement,
- observation of what the signal looks like without what happened next,
- observation of the signal in real time,
- learning how to make a decision to enter the market on the drawing signal.
If you want to speed up this process as much as possible - then know that the fastest to develop (and the fastest to reach the level of independent, correct identification) are people who have seen a lot of examples.
When you look at the perspective of what I wrote - it's pretty obvious, right?
If so, why do 90% of books describing systems contain only a few or a dozen graphic examples? I have seen 120 or so such books. The pinnacle of modesty was one (about a fairly popular system), which contained only nine screenshots. Nine!
With such a number of examples, do you think you can learn anything enough to risk your money on this system? I'm sure you won't.
No one can succeed in this way. Our brain needs to see a lot of examples - preferably in the most market-like conditions. Only then will it correctly solve the tasks posed by the market situation.
This is simply how our brain works, and if we want to follow the path of development quickly, we should respect these laws.
Introduction to rapid learning of systems
Imagine that you have a system and you know it very well. It is easy to understand and apply. The signals are clear. Their identification leaves no doubt. As a result, trading becomes simpler and more rewarding for you.
Every day when you sit down to trade you have at hand a document in which you have briefly written down the next steps of analysis you perform on the market before taking a position. This document is called "Market Analysis."
On the second sheet, "List of trades," you have written down the set-ups you trade. Your market activity boils down to doing some simple analysis and then setting an alert and waiting for one of the setups to be drawn.
If you had any doubts you still have another powerful document at your disposal - detailed descriptions and analyses of 100+ signals, which you can always refer to in case of even slight doubts. "System Manual.
You look at the market from a long perspective, if even one, two or three entries do not pay, the next ones will more than make a profit. You are not in a hurry, you have a plan that you follow without haste. Looking at the growing account you begin to realize that your earlier dreams were too modest, you will be able to afford more.
Nice description of your possible future, right? Then let's make it a reality.
I described above three documents: "Market Analysis", " List of Trades" and "System Manual". And here is the easiest way to get into possession of such:
1. if you are lucky - you will get such documents from someone who teaches you the system. However, this is rare. In most cases you will not have them for two reasons:
- some vendors don't think they are needed ("it's enough for me to show the system") and that's OK, their right
- some system vendors know they can't provide them, because either their systems are a scam or a short-lived ephemera. Then such a document would work against them. Without a system manual, however, it is difficult to achieve any success, it is virtually impossible.
Step 0.
Take a book or training on the system you have. Perhaps you are already a more experienced trader and have a system "in your head" and it is, for example, a modified version of some other system. In this case, the preparation of the mentioned documents will give you a lot: it will clearly reduce the stress before and during the trading and will clearly increase your profits.
Step 1.
Analysis. If your system requires you to analyze markets before entering - list one by one what you are analyzing and how. Strive to make the criteria you use objective. Example "is condition X met or not".
Entries. Write down all the types of entries your system has. If it is an indicator system and you have one type = signal from the system, describe exactly what should point to which indicator.
Fundamentals. If the system requires some additional situation, for example, some information about the instrument ("fundamental" data) then write that down too. What information is needed, what values the fundamental indicators must take.
Position management rules. Write down the rules for entries, position management and exits.
Itd.
Note what the goal here is: I would like you to have a complete description of OBJECTIVE criteria for entries, position management and exits. So that nothing will depend on your mood, your vision, or your "intuition".
Having such detailed descriptions - you will know at any time:
- 1. what you should currently focus your attention on.
- 2. What decision to make based on the reading of what you see.
This is very important, because if you enter the market with money and emotions are turned on - you will be compounding losses and cutting profits, as most beginners do (why they do this I will describe later). And you have NO CHANCE of achieving success.
With money in the market and under pressure - if you don't have objective, independent criteria, your decisions will be bad and it's only a matter of time when someone will take your money away from you.
Step 2.
Once you have the rules of analysis written down (the first sheet) and entries, exits and position management (the next pages, 2-3 at most) then analyze about 30 historical signals.
1 "Reverse" the market on your platform, for example, by a few months.
2. Open the platform with news from the markets of that day. If you have not taken them into account before - add what you do when the strongest movements/news are approaching (most day traders pull back from the market then).
3. Analyze the market according to your documents.
4. Take screenshots of entry and exit signals.
5. Answer the questions:
a. What readings did the indicators have?
b. What did the set-ups look like?
c. Where exactly did we enter the market?
d. At which point did we exit?
e. What did the indicators look like at the time you managed the position?
6. Make notes of your observations in an additional section "What I learned today".
If you do 2 analyses a day according to your written rules, in 30 days you will have as many as 60, and that's a lot - your understanding of how the system works will be very good.
There are two types of investors in the world, those who make money and those who are providers of capital to the market. If you put work into your education you have a good chance to be in the first group, if not - you will definitely be in the second.