Lessons from the Pros

Specialty Skills

Skill Building is about Process Management

To bring your A-Game to the platform you must consistently and continuously remain in a skill-expansion orientation.  What that means is that it is in your best interest to always aim to implement and execute just a little better each time you venture into a trade; to plan, follow all rules and keep all commitments; to construct and hold sacred a standard of excellence that you unerringly maintain.

To some of you this may sound a little over-the-top; but rest assured that trading is serious business and when you put your hard-earned money at risk, for many of you, it means that you are placing your family’s future in your ability to not only protect your capital but to grow it. This is one of the major reasons why people trade; that is, to become financially independent in order that they can provide for their family’s wants not just their needs.  To do this, it takes a proficient and highly effective process that gets stronger and stronger with every trade.

A formula for consistency and focus when you trade.

This kind of fierce focus on what matters most ensures that you create consistency in using the core strategy tools and the mental game tools to develop capacity in emotional strength and endurance in the trade. Your ability to tolerate the myriad distractions that come from triggered emotions caused by unforeseen events in the markets and in the price action – like a market surge or the price action inching toward your stop – can mean the difference between a profit and a loss. You’ve got to have an iron-clad, highly effective process that is also flexible, feedback sensitive, and habit forming.  Let’s look a little closer at what this entails.

It begins with a formula for building skills; not only in trading but in any endeavor from medicine to machines and from technology to trading.

SK (P + ER + FL + H) =SB

At the beginning of the formula is SK, it stands for Specialized Knowledge.  Without knowledge that is specific to the endeavor, you are and will remain incompetent and unable to achieve the goals (the results) that you seek.  For traders, specialized knowledge has to do with the strategies that provide the edge; that small but powerful calculated advantage that makes all the difference and takes what otherwise would be gambling and transforms it into trading.

Online Trading Academy’s edge is their Core Strategy and its components.

This specialized knowledge becomes a multiplier of the variables in the parenthesis, the first of which is P.

P stands for Protocols.  A protocol is a series of sequentially ordered steps toward an aim or a goal.  The sequence here is very important and it involves the procedure, rules and stages that are necessary for reaching the objectives. For example, the 6-step process of preparing to execute a trade.

Next, we add the ER or Effective Routines.  Routines are the things that you do to maximize the protocols impact in getting the results that you want.  They are called Effective because they are well chosen, written down, prioritized and used as a checklist.  When you employ effective routines, you take the thought process out of the equation for moving forward.  This is important because thinking is fraught with danger, as errant thoughts can distract and distort your perceptions of what the data in the markets and on the screen are saying.  Also, ER supports your behaviors to become consistent. You do not want to be inconsistent and/or errant in what you do. You want your behaviors to be methodical.

Then there is the FL or Feedback Loop. Feedback is a part of any behavior, but first you must pay attention to the outcome so that you can use this data as feedback.  Here is where you verify, measure, and document the data to tease out what is not working against what is.  The feedback information is used to identify and track the patterns of thinking, feeling and doing that highly impact your ability, or lack thereof, to achieve the results that you want.

Free Trading WorkshopThe last variable in this formula the H which stands for both Habituation and Habit Formation.  Habituation is what happens when you both mentally and physiologically acclimate to a situation or set of circumstances. An example of this is when you do something repeatedly or are stimulated over and over in the same way causing your system to set up internal loops to handle the stimuli without thinking. The result is that you become less and less sensitive to it; it has become habituated.

Additionally, repetition causes the actions to drop into unconscious control.  This is also called a habit.  In fact, the habit that is formed in this type of condition not only is positive, productive and powerful, it is also how you can re-program to go from doing those things that are not in the interests of your highest and best trading self to doing those things that are. If you follow this formula in earnest you will experience a substantive increase in your skill building capacity which will equate directly to your becoming a consistently successful trader.

Trading is a process-oriented endeavor for those who are serious about becoming and remaining a consistently successful trader.  In any one trade it is not about the outcome, it’s about how well you implement and execute.  You must reserve all your focus to be honed on what you are doing and how you are doing it.  This is what we teach in Mastering the Mental Game online and on-location courses.  Ask your Online Trading Academy representative for more information.  Also, get my book: From Pain to Profit: Secrets of the Peak Performance Trader.

Joyous Trading

Dr. Woody Johnson – wjohnson@tradingacademy.com

DISCLAIMER This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author expresses personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. Reprints allowed for private reading only, for all else, please obtain permission.