I have written about this subject before here, but I felt compelled to revisit it. If there’s one thing that I repeatedly hear that makes me cringe, it’s the idea that screen time = experience. I heard it again today and had to hold myself back from ‘clearing the matter up’. In fact, I also have a bit of a problem with the idea that the number of trades you’ve taken = experience, although probably to a lesser extent.
I’ve seen career sim traders, old timers who haven’t got a clue and relatively new traders who quickly get a handle on the markets and are very profitable. Surely you wouldn’t see this kind of thing if experience is a direct consequence of screen time/number of trades and with more experience you become a better trader? Well, I guess luck has some part to play. But more importantly, experience is accumulated by constructive interaction and not solely on time spent watching or trading the markets.
Now that’s not to say that you automatically qualify for experience just because you’re trying to do the right things. It’s possible to miss market action or not truly feel the importance of particular lessons until you’ve been on the wrong side of the market for example. But by taking the time and effort to plan, trade, observe and review, what you are doing is giving yourself a point of reference. Without a point of reference it becomes much more difficult to recognize the importance of market activity and your own behavior. This is critically important in getting where you want to be. People start out with no trading experience. Most aren’t fortunate enough to have a skilled mentor or structured training program in order to learn the ropes. And this is potentially a huge problem as learning any skill to a significant level is generally done in a structured environment – in trading, you have to structure your own learning.
PAY ATTENTION IN CLASS!
If at school you sit in math class for a year, do you think that you have a year’s worth of experience? You might if you listen to your teacher, take notes, do your homework, work on what you’re not good at and practice. But I’m sure that everyone reading this will recognize the student who turns up to class, gets bored/day-dreams, struggles with their homework and fails to follow up on things they don’t understand. I’m not saying that if you have the same attitude as the former of the two students that you’ll become a brilliant trader – but it will significantly help you to reach whatever your potential is.
PREPARE FOR YOUR OPPORTUNITIES
“Setup” is a term that sometimes fails to convey its proper meaning. Technically the term is correct, but it makes it easy to forget that there need to be reasons behind every opportunity. In tracking these reasons, you are able to define your interaction with the market and build on your understanding of these specific scenarios. You are able to anticipate your entry setup before it happens, recognize where potential setups are likely to fail to materialize and identify behavior that often results in a loss for your setup. Being ready for your opportunities allows you to focus all of your learning and observational energy on scenarios that could lead to you taking a trade – rather than the vast and seemingly random nature of watching every single tick.
If you take the time and effort to plan how you interact with the markets, you will find that you learn far more quickly than by simply sitting in front of your screens for hour upon end, making the same mistakes and somehow expecting things to change. Learning and experience takes a high degree of considered effort and constructive interaction with the market. So make sure that you don’t mistake screen time for experience and make the most of the precious time you do spend trading.
For more updates from Mark and the team at NetPicks, be sure to visit their trading tips blog at NetPicks.com.