Key Points to Accelerate Your Learning Process

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“Hi Coach, what would you say is the most important part of trading (FX) that a beginner trader should learn to be as successful as possible? “ Alexander M.

Hi Alexander, this is an excellent question and as someone who has been involved in the training of traders, and helping to design and structure training programs for over ten years at banks, proprietary trading groups and in the retail sector, I hope I can provide a good answer for you.

A good starting point is to look at what I consider to be the three fundamental components of high performance trading – The three S’s; Skills and knowledge, Strategy and State. To be a successful trader you will actually need all three of these, so let’s look at them in a little more detail and understand why they are each important.

The first ‘S’ is skills and knowledge. Becoming successful at any endeavour will have a skills and knowledge component so you need to ‘know your stuff’ and in trading terms this could include a wide variety of elements such as market knowledge, product knowledge, technical analysis, fundamental analysis, price action, developing trading strategy, market psychology, platform/trading system use and more. Your level of skills and knowledge, your level of competence, will have a significant impact on your level of confidence.

The second ‘S’ is strategy. This is about you developing a trading strategy, one with an edge in the market of some kind, and one that is suited to your own personal style, behaviours and set of circumstances. Your strategy is the vehicle through which your skills and knowledge are expressed. Strategy would also cover the very important areas of risk and money management. To begin with it is likely that you will be taught a particular approach to trading, something standardised, but as you become more experienced and move along the learning curve you will need to develop your own approach – individualisation.

The third ‘S’ is state and concerns your physical, mental and emotional being. This component will be decisive in how well you are able to implement your skills and your strategy and the returns you actually get from the market against your strategies expectancy. This is essentially the psychological component of trading performance.

To be successful you will need all three. Having good skills and knowledge and an effective trading strategy is definitely the focus for the newer trader as without these you are basically gambling in the markets. In sports, the military, trading and all high performance areas skills and strategy are key to success and a key focus of training programs. However, when the pressure is on, when there is money at stake, when time frames are short, when volatility is high or there is high uncertainty, how well you execute your strategy and implement your skills and knowledge will be a function of your physical, mental and emotional state. Fatigue has a big impact on brain function and decision making. Focus and attention are key to doing anything well and underpin trading discipline. Emotions can when not managed correctly significantly impact on your decision making and market returns.

In my experience most beginner traders are looking for the so called ‘holy grail’ the winning and magical trading strategy, a low effort, high return expectation. Sadly, as people eventually find out, this does not exist. Successful traders have spent significant amounts of time learning the skills and knowledge required, developing, adapting and refining their trading strategies, and working on their trading psychology, a process of high effort over a long period of time.

As a beginner trader here are a few other key points that can help you to accelerate your learning process and increase your chances of becoming a successful trader.