The Truth About Learning to Trade

07/05/2012 6:00 am EST

Focus: STRATEGIES

Anne-Marie Baiynd

President and CEO, TheTradingBook.com

As complicated as trading psychology may sound at times, it's always based on a shockingly small collection of hard (and sometimes bitter) truths.

The stock market is possibly the greatest competition in existence. Every dollar is in a contest where there is always a winner and always a loser. A giant game with trillions in currency floating as zeros and ones staged in a virtual playground filled with some of the most calculating, intelligent minds in the world.

Exactly who is our competition in this tournament we're drawn to by independence and the allure of riches and self-indulgences beyond our imaginations? Many of us fail to consider this as we are pulled to this sport like moths to a flame.  Trouble is, that like moths, if we get too close to that flame we get scorched.blistered by something that never looked more beautiful, all the while being a very dangerous space.

Have you considered the fact that we are in a playground filled with people who have been highly trained? Trading professionals have often had multimillion-dollar corporations invest hundreds of thousands of dollars training them in the ways of the market; the rhythms, the secrets, the exploitation of inefficiencies, and a plethora we could never know unless someone from the inside told us.

This is a sport full of exceptional players; often some of the most educated, the most driven, the most ambitious, the most well trained, and possibly, some of the most ruthless. Ponder this as you step out on the field at 9:30 Eastern.

I've been coaching for a while, and I notice this common thread among traders who reach out to me for support. When I ask them how much they have spent on education, the answers come in two forms: none, or not much. Yet, their perception is somehow they can just "pick it up."

When I remind folks about who they have chosen as their competitors, the silence is often uncomfortable. Only after extremely painful losses do some traders accept the fact that to play with professionals and come out without our skin being peeled, we need to learn to be real students of the market; and that takes personal investment of our time, resources, and energy.

In our microwave society, we expect results now, without realizing that excellence is cultivated, not borrowed or bought. There is no shortcut to excellence, and sadly some of us who venture to attain success in this arena never realize this.

We don't learn how to trade by osmosis. We don't learn by simply following someone. We don't learn to trade by losing or winning. We don't learn to trade by doing the opposite of the last failed trade. We learn to trade by choosing a system, creating a trading plan around that system, and executing that plan as synchronously as possible, then doing it over and over and over and over again until you build competence.

A good coach will tell you things that make you uncomfortable. That discomfort should cause you to change. So I'd like to offer you some personal discomfort in an effort to assist in your trading development. Without a systematic, proven and disciplined approach to your trading, you will continue to fail. If you don't have one, you shouldn't be trading until you do.

Shake yourself up, and ask yourself the hard questions. Am I training like a world-class athlete or something bush league? Someone once said, if you keep doing what you've been doing, you're going to keep getting what you've got.

If you don't study the market, you should. If you don't know how to, you should find someone willing to teach you. If you are undisciplined, or lack dedication, work on sticking to routines. If you don't know how to, you should find someone willing to help you. If you feel yourself frozen by fear, find a way to learn to trust yourself. If you don't know how to, you should find someone willing to show you.

Do the things you know you probably should; stretch yourself. Consider ideas that you never would have before. Reach for the next rung; make yourself more of the ideal you desire to be. Take charge of your decisions.

But whatever it is, get out of your comfort zone this year. Your comfort zone might be just the thing making your trading account dwindle-keeping you in the same trading rut, not growing, not really learning and certainly not developing into that great trader you hope to see one day when you look in the mirror.

Anne-Marie Baiynd is a full-time independent trader and can be found at TheTradingBook.com.

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