With this post, I will be taking an extended period of time off to complete my next book and related projects. I thought the final noteworthy post would summarize the best practices of traders who found success in 2023, with the goal of improving yourself and your trading processes in 2024.
Best Practice #1: Move from reactive trading to planned trading
Often times, the psychological challenges that traders face occur because they make trading decisions in a tense moment, when they are most likely stressed and impulsive. Successful traders have extensively studied their most successful trades and know what they do best. They then turn their best practices into trading rules, so they know exactly what types of opportunities to look for in the markets, how to express those opportunities, and how to size and manage positions. etc.. The beauty of knowing what you do best and how to do it is that you can then mentally rehearse the correct actions as part of your preparation for the day. Biofeedback and visualization methods can be helpful in that mental rehearsal. Keeping the right kind of trading journal also helps greatly in focusing your learning lessons. Knowing your best trade also enables you to stand out from the markets when the opportunity is not there. The best traders I work with are waiting with bated breath they Opportunity and do not feel the need to trade. They are like a baseball hitter who knows the pitcher well and is prepared to wait for a good pitch in the strike zone.
Best Practice #2: Rely on your strengths
Below is a short personality test designed to identify your strengths. Here's how to interpret the results. The successful traders I've worked with know who they are, what they're good at, and what excites and challenges them. They also realize their flaws and can benefit from them and turn them into strengths. Because they find ways to trade that leverage their strengths and are beneficial to them, they have no problem staying involved in the markets during difficult times. They also draw on their strengths outside of their involvement in markets, so that their personal activities are a constant source of fulfillment. The right work-life balance isn't just about spending time on extracurricular activities; It gets the best out of you in relationships and in personal endeavors. The number one occupational risk that full-time traders face is burnout. When we don't achieve work-life balance based on what is meaningful to us, we lose work efficiency and become less creative. I have often advised traders to always make sure they have a passion in life that is greater than their passion for trading. If your only strength is trading, this becomes a weakness.
Best Practice #3: Creativity
The biggest weaknesses of traders in general are that they look at the same markets, process the same information, and trade from the same charts and ideas as others. There is very little originality in their thinking or deliberation. They are like a business owner who sets up shop to compete with surrounding businesses, but copies what they do. If you don't do different and distinctive things in the markets, you will not achieve different and distinctive results. This is a topic I cover in the book Trading Psychology 2.0 and which I also cover on the blog here and here. As the book emphasizes, there are specific techniques and processes we can learn to become better, more differentiated idea generators. The key is to look at new information and integrate the information in new ways. Teamwork — connecting with others who have different backgrounds and skills than us — is a valuable practice that can help us broaden our horizons. In my own trading, I've found the best results by focusing on data that others don't look at, from high-frequency metrics of buying and selling to breadth patterns across time frames between stock sectors.
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I hope this helps you train yourself to achieve more success. For more resources, please see this series of articles on trading psychology techniques (links to all articles at bottom of post); This post is about best practices; This post is about learning from our best deals. If there's a specific topic in trading psychology that interests you, you'll likely find something by searching “TraderFeed topic.” So, for example, searching for “TraderFeed trading system” will return related posts. If you are interested in a range of self-help techniques for your trading psychology, The Daily Trading Coach can be very helpful. Best of luck for a happy, healthy and prosperous 2024!
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