I want to continue this posting series by getting into what I started learning, after I realized that there were so many options open to me. In addition to working on understanding the basics of charting (because it felt right, as compared to economic analysis, or fundamental analysis), I started to also understand that there was a psychological side of trading. This is expanded on by Van Tharp, as well as Brett Steenbarger and Mark Douglas. A comment by Alan Farley finally became clear to me after much puzzling- he stated that you can't make money with TA (technical analysis).
This one really confused me, because Farley trades price and volume patterns, and is often unaware of a company's fundamentals. What I gradually came to understand is that analysis is not trading. The issue that I had been struggling with was not a poor level of TA understanding, but trading skill sets. By this, I mean mental skill sets. Over time, I had shown myself that I could scan for and find solid candidates- great patterns that went on to do exactly what I thought they would (although not all picks are winners, of course), but there enough profitable trades to show myself that I had a very profitable strategy.
Here was the issue- I was either not taking the trades (either through not placing the orders, or by not reviewing my watchlists enough to catch the entries until they were too late). In both cases, I was showing signs of self-sabotage. The key was to master trading, not try and master TA. The best way that I found for this- trade so small, that the money did not matter. This way, the trader is so focused on good trade management, that he or she can stay in the flow of trading, and not start to worry about profits or losses. Each loss had to become a form of feedback, and not a threat.
This where I am now- trading small lots, and focusing on staying in the moment, managing the trade, and becoming the best trader that I can, and not the best analysist.
No comments:
Post a Comment