Thus far I have only discussed ideas regarding price action. And while learning how to read the market like a pro is important… one can never trade like a pro until other factors are addressed. These factors, which I call the *intangibles* of the trading business, have nothing to do with entry and exits. I am talking about meticulous planning and organization. I am talking about taking the principles of risk & money management and putting down on paper where there is a plan of action addressing risk, equity management, and so forth. Having a trading plan and trading rules that are developed to exploit the strengths of a method and minimize any weaknesses. I am talking about having a clearly defined set of operating procedures to track and monitor markets and trades, identifying trading opportunities, etc. I am talking about keeping a trading log or journal that not only documents your trading results, but also documents the reasoning behind your trades and your decisions… which allows you to periodically review your performance.
The best traders in the industry, from what I have read throughout the years, are always writing their thoughts on paper for later review. The pros are ever aware of their level of performance and they are relentless in improving themselves as traders. They try to both improve performance and make their trading business as efficient as possible. This is done through a disciplined approach in all aspects of the trading business.
So many books and courses out there focus only on indicators, and etries. The better books and methods address exits and the principles of trade management. But to round out their education, an aspiring trader needs to also know the BUSINESS OF TRADING. Everything that is involved with trading that has nothing to do with squeezing the trigger.
I share these random thougths with my readers, especially new traders, not to advocate or promote any single method or system. But rather, to point out that learning what you need to know to have a realistic chance of succeeding is possible. Yes, there is a lot to learn and it is not easy… but it can be done. It takes the ability to work and study hard, to be open to multiple streams of thoughts and information, and to then synthesize it all into a method or approach that feels comfy to you. It takes a methodology or approach that allows you to have enough information to act boldly, confidently, with conviction… while not leaving you open to getting blindsided.
This means that on top of the directional indicators that you learn, the entry and exit strategies that you adopt, the trade management scheme that you employ, the risk & money management plan that you develop, and the operating procedures to run every detail of your trading business that you use… You must also learn to think and act like a pro trader. You must be on top of the markets that you trade, be aware of any economic or fundamental factors that may blindside you and so forth. But most importantly… you must have learnt to control your thougths and feelings in a manner that allows you to make intelligent and rational decisions under the pressure. You must harness a state of mind that is focused and concentrating on the HERE AND NOW. You must develop a fanatical sense of capital preservation… as well as develop the instincts of a predator ready to pounce on a kill.
(Speaking of pouncing the market… double top at 1315 and my 5 minute cycle overbought and turning south. Textbook set-up, just sold again)…
For the conclusion, see part five of this rather long original article.