Since my early childhood, I have a passion for Learning & Growth. During the early 1980s, there was a common belief that “Learning” was only possible as you were growing up. Later in life, learning would become more and more difficult until this ability came to a complete standstill. I was very opposed to that belief even as a kid and I established a strong desire to prove this theory to be untrue.
Since I began teaching at the Van Tharp Institute many years back, I have continued to remain excited about paving the road helping people become successful traders. I know from my own experiences that trading is one of the most difficult roads you can choose, but most gratifying as well. As you surely know, there are many roadblocks and obstacles along the way – physical, mental or psychological. From the start, participants have left my workshops excited and motivated to apply the newly learned trading systems at home. I was surprised in the first few years, however, to find that only a small number of the workshop participants actually ending up trading the systems. Initially, this created some frustration for me.
Was it true that learning became harder for people as time went on and learning-to-trade specifically was so difficult that only a few were meant to be successful? No, I did not believe that. I began to see that between learning the Theory (completed by attending the workshop) and applying that Theory by trading the live markets was just too big of a step Having gone through a huge learning curve myself, it became clear to me that my teaching approach was missing some key elements.
Trade Simulating to Achieve Flawless Execution
Since trading simulators have become affordable and easily available, I highly recommend that my students trade-simulate the systems first in a safe and controlled environment before they expose themselves to the live markets. Trading in a simulated environment offers a way to learn where no harm can be done. Especially in the beginning of your trading career you want to build confidence in both yourself and the systems. Within one month, a trader can go through hundreds of different trade patterns so to learn flawless execution of the strategies in various market situations. During this phase, learning is about discovering the nuances of the patterns and being able to determine a high-quality signal. The focus at this stage is on the process and the goal is to execute without mistakes – achieving great R-results comes second.
To use a metaphor, trade-simulation is a bit like learning-to-swim in the shallow end of the pool. Though there is no large risk involved, sticking your toe in the chilly water still requires some overcoming But as you take heart, make the first moves, and plunge in, paddling yourself around becomes natural and joyful. Using a trade simulator is very similar as it involves some initial resistance, however, once you start the process, learning becomes a lot of fun.
After I introduced trade-simulations into the learning process for my students, more students ended up trading the systems and achieving better results. Something, however, was still missing.
Building your Live Trading Process
I began to notice a number of cases of what I call “simulation professionals”. These traders became really great in simulation mode but somehow did not take the step over to trade the Live markets. That was a startling discovery as finding the same moves and trading them in the Live market should have been easy after mastering the patterns in the simulator. But it was not! Live market trading is quite different and much more complex of an activity. Maybe it’s similar to trying to go from swimming in a calm pool to swimming in the deep, salty waters of the ocean with additional factors coming in such as wind, waves, and undercurrents.
One primary mistake many beginning traders make is thinking that they can compete with experienced traders right away. As you can imagine, the market welcomes new entrants as easy prey. If you are one of those rookie traders, then you should be realistic and be fully aware that capital markets are some of the most competitive arenas in the world. Imagine a group of sharks looking for some fun – to your disadvantage. Experiencing this first hand can be very painful and costly. Thus, as with anything complex, preparation is key.
The systems I have developed and trade are built around the concept of “Hunting for Other Peoples’ Stops”. They capitalize on being a shark instead of easy prey. Needless to say that to grow into a shark, you need to invest in some time and effort preparing to learn to hunt.
Simulation traders need to develop additional skills to be able to manage the complexity of the Live Trading Process which includes a wide range of additional capabilities such as Efficient scanning for opportunities, Alert setting, Morning trading preparation, Frustration Management and many more. These Live trading processes are very individual and each trader needs to customize them for their own Personal Trading Game (see article “A Good System Relies On A Robust Trading Process”). At the point where the trader has mastered flawless execution, it’s time for the trader to pursue a new goal – profitability.
How to Learn Best?
Many books about learning and development have appeared over the years and you have probably heard such terms as Deliberate Practice or Deep Practice. These methods have in common a special type of practice that is purposeful and systematic in nature requiring focused attention. Somebody practicing in this way might look thoughtful, and at times even slow, as if they were moving in slow-motion.
The author of “The Talent Code” describes the case of Clarissa who was learning to play her clarinet. Clarissa was not particularly talented but became famous with music experts. The way she practiced helped her learning speed accelerate ten-fold. How did she do this? Here is a description of how she practices:
“. . . it sounds pretty bad. It’s not music, it is a broken-up, fitful, slow-motion batch of notes riddled with stops and misses. She looks as though she is walking into a chilly wind … and her face tightens into a squint. Playing, again and again, she adds a layer of spirit, rhythm, swing as if she had a blueprint in her mind constantly comparing herself to. She is not ignoring errors, she is hearing and fixing them. She is fitting small parts into the whole, drawing the lens in and out all the time, scaffolding herself to higher levels”.
Surely this is not ordinary practice. It is a highly targeted and error-focused process. One can literally feel how something is being built in the process. Now you can apply the same method of practice to trading. I have seen such accelerated growth with many of my students with such a method. You can read an article on this topic written last year. (see article “Deliberate Practice and Trading Mastery”).
While my students learn a great deal, without a doubt, I learn as much from them as they learn from me. Thanks to them, my teaching has evolved and improved over the years. A good bunch of former students are trading the markets full-time making their living hunting for prey. And today, every workshop helps new traders become great traders in months instead of years and I am very proud of them!
Looking back to that popular theory from my childhood days, I have finally proven that Learning and Growth are independent of age and they actually never stop. I believe that learning to trade is more a question of passion and having the motivation to succeed.
Do you want to learn how to Hunt for Other Peoples’ Stops?
Join me for my next Forex Trading Workshop and transform yourself into a Hunter.
PS: From last weeks’ Online Forex Trading Event please find below the video outlining the 2 most discussed trades that developed nice R-multiples.
I’m looking forward to meeting you soon in person!