Mastering the Markets

Mastering the Markets

What do we mean by mastering the markets and what steps can you take to do this?

K. Anders Ericsson is a Swedish Psychologist. He is an expert researcher in the psychological nature of human performance. Ericsson created the phrase ‘deliberate practice’. He found that the difference between high performers and average performers was whether deliberate effort was being put in over the longer term to improve performance.

Ericsson narrowed deliberate practice into 4 key areas. Each of these areas can apply to every trader’s journey towards market mastery.

1 Motivation

It’s a good starting point. Whatever your motivation is to become a trader, you need to be doing it for the right reasons. For most it will be to make money. Which is quite Ok. It’s as good a reason as any. Yet many new traders think that making money is going to be easy.

The mechanics: You press the buy button and almost immediately you’re the owner of some stock. Yet this is where the lines of motivation can become blurred. Your motivation to trade may be more aligned to the notion that it’s an ‘EASY’ way to make money. If this is the case then be prepared to lose your trading capital, and pretty quickly at that.

So if your motivation is to make money from trading, there also needs to be the motivation to treat your trading as a profession. You don’t master any profession by doing a weekend course, then turning up Monday expecting success. Trading is a process and it’s a lengthy one.

2 Pre-existing Knowledge

Many new traders start trading with limited pre-existing knowledge. Big Mistake! Tony Robbins the life coach said it best. If you want to master anything in life, find an expert in the field who has spent years building their knowledge. Then try and find a means to access that knowledge.

It may be through books they have written. Seminars they have run. Or a subscription service they offer as a form of ongoing mentorship. If you don’t know what you’re doing, seek the services of someone who does. It will save you a lot of heartache along the way.

3 Getting Immediate Feedback

Now you might think we have this covered as traders as the markets are a classic example of giving immediate feedback on how we are performing. Yet unfortunately it’s not that simple. In a previous newsletter we highlighted that the markets are often very bad teachers.

Markets will micromanage you out of a trade. Markets can encourage you to exit perfectly executed trades on a back fill, or make you stay in trades that you should have exited weeks ago.

So yes the markets provide feedback on a second by second basis. Yet due to its frequency, it can also become noise that is very difficult to interpret. The only way around this is to stay 100% focused on your processes, not on your expected outcomes.

4 Repetition 

From a trading perspective this means following your strategy without fail. Nick Radge frequently uses the term ‘next 1000 trades’. If you are following your strategy and you get stopped out for a loss, you simply move on. Follow the same process on your next set up. Nothing changes. All you have to do is rinse and repeat for the next 1000 trades.

Plan the Trade. Trade the Plan.

Remember: there is no Holy Grail. Deliberate practice of the above 4 key areas repeated consistently will guide you down the path towards Trading Mastery.