When you are involved with any skill-based endeavor like trading, it is critical that you measure what you do. When you want to get good at something you must measure it. You must have a way of knowing how you are doing with respect to the variables that make up the process … this involves getting feedback. Now, there are some traders who would say, “All the feedback I need to know is if I am making money or not.” To this I would reply…if you are not measuring, tracking and documenting your trades you have virtually nothing with which to base your progress upon.” And, if you are trading by chance, you my friend are risking your money unnecessarily. Basing your trades solely upon profit and loss is an ineffective way to measure your “mastery” of the process. If you don’t know what you did right or wrong, then you can’t duplicate the good or eradicate the bad behavior. Without this knowledge, you are trading on chance. Trading mastery involves “skill building.” Skill building is critical to any performance-based effort because that is the path to getting better.
Actually, there is a skill building equation, which is:, P + EF + FL + H = SK (protocols + effective routines + feedback loops + habituation = skill building). The essence of skill building hinges on being self-aware. If you are self-aware then what you do, how you do it, the frequency with which you do it and the order become variables that you are not only able to track, measure and document, but you will be able to manipulate as well.
Firstly, skill building involves a set of trading protocols. A protocol is a series of sequentially ordered steps toward an aim or goal. And, protocols can be found across the board having to do with anything that involves performance; like medicine, law, accounting and sports, to name a few. Trading protocols are made up of strategies, procedures, set-ups and rules. They are talked about, reviewed and evaluated in special classes, for instance Online Trading Academy’s Extended Learning Track where rule-based trading is emphasized through strategies and set-ups.
Secondly, protocols must be supported by effective routines. This is where you take the sequentially ordered protocol and develop a routine where you are doing the same thing “over and over.” This approach not only instills the behavior into a set of responses that support the overall goal, but it also “trains” your system to continue to follow-through when things get difficult – you are actually creating a positive groove that resists deviation. Training is about learning and doing. You’ve heard of the adage “practice makes perfect,” well actually practice makes “permanent” in your body/mind system. All world class achievers have trained for years to accomplish their goals. Additionally, the routine resists erratic behavior. It is critical that you have consistent behavior as you reduce the propensity for your responses to become an out-of-control variable.
Thirdly, it is imperative to create a feedback loop in order to verify and document whether or not the protocols are performing adequately. Through measuring, tracking and documenting you will identify not only what needs to be modified or changed with the protocol or strategies and set-ups (the mechanical data); you will also identify what needs to be modified in your thinking and emotions, (the internal data). Of course, feedback can be principally a “self-monitored” process; but, as well it is also extremely effective when you are given critiques from someone else. But, the point is that feedback in any form and from any aspect of your immediate environment should be welcomed and never taken personally. It is only additional information, which can be the lynch pin of your ability to master the process. If you don’t know what went wrong you can’t address the issue and of course it will remain an issue.
After you have used your feedback to thoughtfully handle your mechanical data and as well your internal data and you have instilled the routine deeply, then you have begun the process of habituating the entire sequence. Habits are powerful and you know from your own experience that good habits lead to desired results and bad habits lead to headaches.
So, in part the conversation is about instilling strong, goal oriented habits that will lead you to what you want…skill building. Also, when you have incorporated a skill into your mind/body system, and in other words you have mastered the process, you have gone from being totally unaware (unconscious incompetence) to working on what you have identified (conscious incompetence) to establishing a routine (conscious competence) to habituating the thinking, feeling and doing (unconscious competence). The beauty of being unconsciously competent is that the behavior becomes the “designed” default mechanism (an option that is selected automatically unless an alternative is specified) for following through on what matters most in your trades. Remember when you were learning to drive. It was very scary and difficult. You went from being unconsciously incompetent (you didn’t know what you didn’t know), at 4 or 5 years old; to consciously incompetent (you knew there was a process called driving and at 10 or 11 you were painfully aware that you didn’t know how); to consciously competent (at 15 you were learning and you had to think about every small detail as you drove); to unconsciously competent ( at 30 your skill level had dropped into your subconscious behavior where you could eat a burger, talk on the phone, and drink a cup of coffee simultaneously while driving – of course not recommended).
So, skill building is the path to attaining, maintaining and sustaining your A-Game. And, you cannot skill build without a feedback process that is aimed to identify what works and what doesn’t, which of course is related to both the mechanical data (all the market, news and indicator driven data) and your internal data (your thoughts, emotions and behavior). You must track, measure and document all significant data (any data that materially affects your trade). If you do this religiously, and use the information to modify your protocols and routines you will habituate this process and you will skill build. Trading in the trenches requires the best that you have to bring to your trading platform. Thousands of traders out there are willing to do what it takes to master the process. You must ask yourself, are you willing to do what it takes? Master your mental game. Ask your Online Trading Academy Educational Counselor for information on classes that are designed to help you do just that…skill build.