My job as a coach is to find talented people and make sure they learn and follow the fundamentals. But what is a talented trader? What do I look for in people before I will personally coach them?
One of the first things I look for is commitment. Most people come into trading, having accumulated a lot of money from some other profession. We see a lot of doctors, lawyers, engineers, IT professionals, etc. And all of those professions require a lot of training to master the skills involved. You cannot just walk into a hospital, with no training and say, “I'd like to do some brain surgery today!” Instead, it requires sixteen years of basic education, four years of medical school, serving an intern and then a residency period. That requires a lot of dedication and commitment to just begin to practice as a doctor.
Now let's look at trading. What's the entry price for trading? Perhaps you might watch some show on television in which some guru tells you what stocks they like. You then open up a brokerage account, by filling out some paperwork and depositing some money. You can then buy some stocks and wait for your profits. Entry into trading is that easy! It's designed that way so that other people can take your money – in fees and commissions. And people who trade that way have the same results that an off-the-street brain surgeon might have – the patient dies. In this case, the death is to your money.
Last week, in Tip 9, I covered the elements of successful trading. And they were quite extensive, including: 1) doing what's required on a daily basis, going through the trading process; 2) have a strong enough money mindset to have sufficient funds to trade with; 3) having a business plan to guide your trading; 4) having a good system or perhaps two or three good systems; and 5) having proper position sizing in place. And behind all of those elements is the key to everything, your personal psychology.
Working extensively in these five areas requires immense commitment, the same commitment that is required to become a brain surgeon. And it makes sense, great traders make a lot of money, but you've got to be willing to do what it takes to be successful.
This requires that you have a goal in mind, and have an intense desire to reach that goal so that you'll do whatever it takes to get there. This is the essence of commitment. But most people don't realize what is necessary for trading success because it's not required for entry into the position. And while I can teach people what's important and how to develop this commitment to achieve it, I certainly cannot give them the commitment to do it. And potential traders must have an intense commitment in order to get through the elements of successful trading.
Imagine someone who is driving around but has no where in particular to go. We'll call him Henry. Henry stops at a fast food restaurant and orders a sandwich. The sandwich turns out to be the worst sandwich he's ever had. It's been burnt, dropped, and the sauce on it is spoiled. As a result, Henry complains and then talks to the other restaurant patrons about the food. The manager is not very happy and kicks Henry out. Now Henry is infuriated and starts a campaign through the local newspaper to have the restaurant closed. This goes on for weeks and Henry is willing to spend the time because he doesn't have anything else to do.
When people are not committed, they run into distractions. Henry had no place to go, no motivating force behind him, so he just attached himself to a poor tasting sandwich and his campaign against the restaurant took up a lot of his time.
Now imagine someone who has an important appointment that they must make within the next three hours. They still have a 2.5 hour drive to make the appointment. However, they stop at the same restaurant and get the same bad tasting sandwich. Does the sandwich suddenly consume them? No, they might complain and throw it away, but then they move on because they are committed to something else. They either stop at another restaurant to buy something to go or they skip lunch. To the commitment person, the most important thing is the destination.
When you are committed to becoming a good trader, you do whatever it takes. And little things don't throw you off track. When distractions arise, you just avoid them and focus on your goal. That's the power of commitment. And commitment is essential to trading success.
In my experience, people who are not committed will find numerous distractions that will take up most of their time. They complain that they are too busy to do what it takes to be successful as a trader, but most of their time is pre-occupied with distractions.
A football coach looks for talented players who have the commitment to follow the fundamentals and do what it takes to be the best. You might be the most talented and gifted athlete ever, but if you don't have the commitment to be the best, the coach will probably drop you from the team. And I find myself doing exactly the same thing with traders, I look for talented people with a lot of commitment because they are the ones who will be successful. How is your commitment to trading excellence? If you read over the elements of successful trading given in Tip 9, how committed are you to achieving them? This is your real entry requirement for trading success.
http://www.forexfactory.com/pics/articles/van_tharp.jpg
Van K. Tharp, Ph.D.
TradingEducation.com
One of the first things I look for is commitment. Most people come into trading, having accumulated a lot of money from some other profession. We see a lot of doctors, lawyers, engineers, IT professionals, etc. And all of those professions require a lot of training to master the skills involved. You cannot just walk into a hospital, with no training and say, “I'd like to do some brain surgery today!” Instead, it requires sixteen years of basic education, four years of medical school, serving an intern and then a residency period. That requires a lot of dedication and commitment to just begin to practice as a doctor.
Now let's look at trading. What's the entry price for trading? Perhaps you might watch some show on television in which some guru tells you what stocks they like. You then open up a brokerage account, by filling out some paperwork and depositing some money. You can then buy some stocks and wait for your profits. Entry into trading is that easy! It's designed that way so that other people can take your money – in fees and commissions. And people who trade that way have the same results that an off-the-street brain surgeon might have – the patient dies. In this case, the death is to your money.
Last week, in Tip 9, I covered the elements of successful trading. And they were quite extensive, including: 1) doing what's required on a daily basis, going through the trading process; 2) have a strong enough money mindset to have sufficient funds to trade with; 3) having a business plan to guide your trading; 4) having a good system or perhaps two or three good systems; and 5) having proper position sizing in place. And behind all of those elements is the key to everything, your personal psychology.
Working extensively in these five areas requires immense commitment, the same commitment that is required to become a brain surgeon. And it makes sense, great traders make a lot of money, but you've got to be willing to do what it takes to be successful.
This requires that you have a goal in mind, and have an intense desire to reach that goal so that you'll do whatever it takes to get there. This is the essence of commitment. But most people don't realize what is necessary for trading success because it's not required for entry into the position. And while I can teach people what's important and how to develop this commitment to achieve it, I certainly cannot give them the commitment to do it. And potential traders must have an intense commitment in order to get through the elements of successful trading.
Imagine someone who is driving around but has no where in particular to go. We'll call him Henry. Henry stops at a fast food restaurant and orders a sandwich. The sandwich turns out to be the worst sandwich he's ever had. It's been burnt, dropped, and the sauce on it is spoiled. As a result, Henry complains and then talks to the other restaurant patrons about the food. The manager is not very happy and kicks Henry out. Now Henry is infuriated and starts a campaign through the local newspaper to have the restaurant closed. This goes on for weeks and Henry is willing to spend the time because he doesn't have anything else to do.
When people are not committed, they run into distractions. Henry had no place to go, no motivating force behind him, so he just attached himself to a poor tasting sandwich and his campaign against the restaurant took up a lot of his time.
Now imagine someone who has an important appointment that they must make within the next three hours. They still have a 2.5 hour drive to make the appointment. However, they stop at the same restaurant and get the same bad tasting sandwich. Does the sandwich suddenly consume them? No, they might complain and throw it away, but then they move on because they are committed to something else. They either stop at another restaurant to buy something to go or they skip lunch. To the commitment person, the most important thing is the destination.
When you are committed to becoming a good trader, you do whatever it takes. And little things don't throw you off track. When distractions arise, you just avoid them and focus on your goal. That's the power of commitment. And commitment is essential to trading success.
In my experience, people who are not committed will find numerous distractions that will take up most of their time. They complain that they are too busy to do what it takes to be successful as a trader, but most of their time is pre-occupied with distractions.
A football coach looks for talented players who have the commitment to follow the fundamentals and do what it takes to be the best. You might be the most talented and gifted athlete ever, but if you don't have the commitment to be the best, the coach will probably drop you from the team. And I find myself doing exactly the same thing with traders, I look for talented people with a lot of commitment because they are the ones who will be successful. How is your commitment to trading excellence? If you read over the elements of successful trading given in Tip 9, how committed are you to achieving them? This is your real entry requirement for trading success.
http://www.forexfactory.com/pics/articles/van_tharp.jpg
Van K. Tharp, Ph.D.
TradingEducation.com