The first and primary challenge for you in the first step of learning the system and trading is to commit all your efforts to learning the system.
The result of your work should be:
Therefore, your first step towards professionalism is correctness.
When you reach this level it will be time for the next one: Convincing yourself that you are capable of making money with this system.
Important note: The first goal is the correctness of the signal execution. It is not to make money in the market.
Making money as a goal will come a little later (as soon as possible so be patient).
Learn to walk first before you think about running. Learn to stay afloat first before you think about competing in swimming competitions. :)
Quick entry with money into the market pleases the great and experienced traders - they know that if you are with money in the market they will make money.
We have the same attitude among other representatives of the other side of the transaction - some of the brokerage companies.
Remember: your first step towards professionalism is the correct execution of all elements from analysis, market entry, position management and exit.
Correct signal execution and a loss is a reason to be happy! You stuck to the rules and they are the ones that pay (later I will explain to you very important reasons why).
Take an important rule at the beginning that will stay with you forever: you can have two benefits from an order. Either earnings or learning. A clear awareness of your goal will help you. The goal contains two elements: the what and the why. The first defines what is to be done and the second motivates you to act.
Now we will focus on your goal. The first is to make money in the markets and have long-term success allowing you to realize your dreams and aspirations. The freedom to live where you want and do what you feel like doing, without a boss, without someone telling you what to do and when to do it.
The way to do this is by learning to make money systematically in the markets - over many years. A very important step to this is to convince yourself that you are capable of making money with the system you have. To do this as soon as possible it is worth having some helpful tools:
- A System Manual - you can get one from an author or system trader, or you can prepare one yourself. It should contain dozens of examples discussed.
- Analysis and Trade Book - containing your historical analysis, perhaps simulations and then trades. Its periodic review is to help you learn the realities of the system as quickly as possible.
Review the trades at least once a week and analyze them. It helps a lot if they are printed out and you can make notes in the margins.
- A short - written down on one page (max two) the main rules of the system and the types of inputs (if there are several). Have it always at hand when trading.
If you have 30 examples of analysis (from the Book or Manual) - then periodically return to them, for example, every day (at the beginning) you can review five trades each. The next day - another five. The next day - another one. Within 7 days you repeat all of them. Then start over again, until it takes you 5-10 seconds to look at a trade, you already know everything about it and nothing new comes up.
How do you organize your study time?
Allocate some time each day to study, let it be a minimum of a quarter of an hour per day, but systematically. Start thinking of time as your resource to invest. Start investing your time, ask yourself "what can this time bring me useful"? Maybe it's worth spending it on my life goals? This is a completely new approach for many people: start thinking of your time as something you can invest - good or bad.
Take advantage of "empty runs" - time on the bus, subway, train. Take notes and review them.
Limit the amount of TV, it's opium for the masses, it annoys, stupefies and manipulates. A good movie is one thing, but stupid series or news full of manipulation is something else.
Take care of yourself and don't try to do everything at once or at any cost. Don't become a machine to achieve your goals. Be gentle and good to yourself, enjoy and reward yourself for being on the right track.
Don't punish yourself for not doing something "on time." Reward yourself for what you have done, your work is worthy of respect and admiration and associate it that way, not with something negative.
Devote the best time of the day to investing in the future: learning the system and trading. The best time is when you are at your best intellectually.
The best work plan (always) is a step-by-step plan.
If you don't get a "System Manual" from someone - prepare it yourself (with a trader friend, with a group). Break down each major thing into smaller ones and focus on each one in turn.
For example: spend consecutive days on descriptions of historical trades. It may take you up to two days to prepare the first one. And celebrate that success already! That's a big deal!
Successively prepare the next ones - this way you slowly but steadily move forward. And in a month you may already have, for example, 15-20 analyses. And in two months - 30-50. Do it this way with each major challenge - break it down into smaller ones.
Don't forget to enjoy and reward even small successes. This is an important signal to your psyche that you are on the right track, it builds good associations.
In this way, the time spent studying will be nicer and more enjoyable than if you demand harshly of yourself and punish for "deviations from the plan." Believe me the latter is a road to nowhere.
The smaller the portion to learn the better to start with.
The simpler the system the faster you will master it. If you have several types of inputs limit yourself to one - two of the simplest and set yourself the goal of mastering them to perfection and then - reach profitability with them.
The more complex the system - the more time it will take you to master it, the more frustrations you will have and the more chances you will give up on it. Therefore, focus on the simplest inputs that pay and leave the rest for later.
There will always be time to expand your system.
Set aside complicated systems with complex, elaborate decision-making processes for later years.
An introduction to building your decision-making skills
Once you've tackled the system learning materials, the next important step is to train your decision-making skills. This process looks different for different systems - so I'll simplify it to asking two questions:
It is important to realize that being a trader is quite different from being a good analyst. Good analysts rarely become good traders - these two skills (analytical and decision-making) stand in some opposition to each other.
At some point a trader - analyzing the situation and comparing it with the requirements of the system - makes a decision to enter the market. We practice these skills by observing the charts and studying whether the criteria that our system implies are met. And if so - we indicate where the market entry would occur.
Speaking of the number of such simulations - we can say that an experienced trader-expert has, for example, two or three thousand such decision-making processes behind him. We will not need such a large number, about a maximum of 100-200 will suffice and this is for two reasons.
The first - after such a number of examples, we will have a fairly good picture of how the system may work, but it will be incomplete. No simulation can replace reality: stress, emotions, market pressure.
Second - after such a number of examples, there will no longer be a growth in understanding of the system.
Self-made screenshots with the further part of the chart obscured can help here - only the part needed to make a decision is visible. The next page can be shown the later course. Dozens of such sheets - drawn up and prepared in the form of tasks for us will allow our brains to quickly become familiar with the system and the critical moment of entering the market.
It is puzzling that, for example, mechanics for any car have several hundred pages of manuals explaining the operation, assembly and disassembly, while traders learning to invest tens or hundreds of thousands of dollars - have nothing even close.
This kind of help, whether prepared on your own or received from outside, is simply invaluable in terms of getting to know the mechanics of the system inside out, and is hard to replace with anything else.
Therefore, if you do not yet have your "Task Collection" prepare it at the earliest possible time. If you work in a group - share the work with your colleagues and let each prepare tasks for the other. Divide by month, for example, and let each prepare the tasks of a different month with a separate document containing the answers. Then have everyone rework the tasks from their colleague(s).
The result of your work should be:
- correct identification of the signal from the system,
- correct placement of an order,
- correct management of it until you exit the market.
-
Therefore, your first step towards professionalism is correctness.
When you reach this level it will be time for the next one: Convincing yourself that you are capable of making money with this system.
Important note: The first goal is the correctness of the signal execution. It is not to make money in the market.
Making money as a goal will come a little later (as soon as possible so be patient).
Learn to walk first before you think about running. Learn to stay afloat first before you think about competing in swimming competitions. :)
Quick entry with money into the market pleases the great and experienced traders - they know that if you are with money in the market they will make money.
We have the same attitude among other representatives of the other side of the transaction - some of the brokerage companies.
Remember: your first step towards professionalism is the correct execution of all elements from analysis, market entry, position management and exit.
Correct signal execution and a loss is a reason to be happy! You stuck to the rules and they are the ones that pay (later I will explain to you very important reasons why).
Take an important rule at the beginning that will stay with you forever: you can have two benefits from an order. Either earnings or learning. A clear awareness of your goal will help you. The goal contains two elements: the what and the why. The first defines what is to be done and the second motivates you to act.
Now we will focus on your goal. The first is to make money in the markets and have long-term success allowing you to realize your dreams and aspirations. The freedom to live where you want and do what you feel like doing, without a boss, without someone telling you what to do and when to do it.
The way to do this is by learning to make money systematically in the markets - over many years. A very important step to this is to convince yourself that you are capable of making money with the system you have. To do this as soon as possible it is worth having some helpful tools:
- A System Manual - you can get one from an author or system trader, or you can prepare one yourself. It should contain dozens of examples discussed.
- Analysis and Trade Book - containing your historical analysis, perhaps simulations and then trades. Its periodic review is to help you learn the realities of the system as quickly as possible.
Review the trades at least once a week and analyze them. It helps a lot if they are printed out and you can make notes in the margins.
- A short - written down on one page (max two) the main rules of the system and the types of inputs (if there are several). Have it always at hand when trading.
If you have 30 examples of analysis (from the Book or Manual) - then periodically return to them, for example, every day (at the beginning) you can review five trades each. The next day - another five. The next day - another one. Within 7 days you repeat all of them. Then start over again, until it takes you 5-10 seconds to look at a trade, you already know everything about it and nothing new comes up.
How do you organize your study time?
Allocate some time each day to study, let it be a minimum of a quarter of an hour per day, but systematically. Start thinking of time as your resource to invest. Start investing your time, ask yourself "what can this time bring me useful"? Maybe it's worth spending it on my life goals? This is a completely new approach for many people: start thinking of your time as something you can invest - good or bad.
Take advantage of "empty runs" - time on the bus, subway, train. Take notes and review them.
Limit the amount of TV, it's opium for the masses, it annoys, stupefies and manipulates. A good movie is one thing, but stupid series or news full of manipulation is something else.
Take care of yourself and don't try to do everything at once or at any cost. Don't become a machine to achieve your goals. Be gentle and good to yourself, enjoy and reward yourself for being on the right track.
Don't punish yourself for not doing something "on time." Reward yourself for what you have done, your work is worthy of respect and admiration and associate it that way, not with something negative.
Devote the best time of the day to investing in the future: learning the system and trading. The best time is when you are at your best intellectually.
The best work plan (always) is a step-by-step plan.
If you don't get a "System Manual" from someone - prepare it yourself (with a trader friend, with a group). Break down each major thing into smaller ones and focus on each one in turn.
For example: spend consecutive days on descriptions of historical trades. It may take you up to two days to prepare the first one. And celebrate that success already! That's a big deal!
Successively prepare the next ones - this way you slowly but steadily move forward. And in a month you may already have, for example, 15-20 analyses. And in two months - 30-50. Do it this way with each major challenge - break it down into smaller ones.
Don't forget to enjoy and reward even small successes. This is an important signal to your psyche that you are on the right track, it builds good associations.
In this way, the time spent studying will be nicer and more enjoyable than if you demand harshly of yourself and punish for "deviations from the plan." Believe me the latter is a road to nowhere.
The smaller the portion to learn the better to start with.
The simpler the system the faster you will master it. If you have several types of inputs limit yourself to one - two of the simplest and set yourself the goal of mastering them to perfection and then - reach profitability with them.
The more complex the system - the more time it will take you to master it, the more frustrations you will have and the more chances you will give up on it. Therefore, focus on the simplest inputs that pay and leave the rest for later.
There will always be time to expand your system.
Set aside complicated systems with complex, elaborate decision-making processes for later years.
An introduction to building your decision-making skills
Once you've tackled the system learning materials, the next important step is to train your decision-making skills. This process looks different for different systems - so I'll simplify it to asking two questions:
- Where on this chart would you make a decision to enter the market?
- Where would you put SL and where would you put TP?
It is important to realize that being a trader is quite different from being a good analyst. Good analysts rarely become good traders - these two skills (analytical and decision-making) stand in some opposition to each other.
At some point a trader - analyzing the situation and comparing it with the requirements of the system - makes a decision to enter the market. We practice these skills by observing the charts and studying whether the criteria that our system implies are met. And if so - we indicate where the market entry would occur.
Speaking of the number of such simulations - we can say that an experienced trader-expert has, for example, two or three thousand such decision-making processes behind him. We will not need such a large number, about a maximum of 100-200 will suffice and this is for two reasons.
The first - after such a number of examples, we will have a fairly good picture of how the system may work, but it will be incomplete. No simulation can replace reality: stress, emotions, market pressure.
Second - after such a number of examples, there will no longer be a growth in understanding of the system.
Self-made screenshots with the further part of the chart obscured can help here - only the part needed to make a decision is visible. The next page can be shown the later course. Dozens of such sheets - drawn up and prepared in the form of tasks for us will allow our brains to quickly become familiar with the system and the critical moment of entering the market.
It is puzzling that, for example, mechanics for any car have several hundred pages of manuals explaining the operation, assembly and disassembly, while traders learning to invest tens or hundreds of thousands of dollars - have nothing even close.
This kind of help, whether prepared on your own or received from outside, is simply invaluable in terms of getting to know the mechanics of the system inside out, and is hard to replace with anything else.
Therefore, if you do not yet have your "Task Collection" prepare it at the earliest possible time. If you work in a group - share the work with your colleagues and let each prepare tasks for the other. Divide by month, for example, and let each prepare the tasks of a different month with a separate document containing the answers. Then have everyone rework the tasks from their colleague(s).