Whatever system or strategy you trade, you ultimately want to reach your full trader potential as an Independent Trader. What do I mean by that? An Independent Trader has transitioned along the steps of the trader development path while developing a unique trading style. But most importantly, he or she trades in a Cool, Calm and Confident way with Consistency – the famous 4 Cs.
Could you (or anyone) demonstrate these 4 C’s right after you opened your first trading account? Certainly not. There are a good number of hurdles to overcome – of which most traders are unaware – even ignorant in a kind of naive way. This is one of the reasons why most people who become successful traders leap hurdles (often unknowingly) for many years to achieve their success.
The process of acquiring the 4 Cs, however, does not have to take years. Actually, every trader – experienced or novice alike – should set a goal to become an Independent Trader in less than a year! Can you accelerate your trader development to achieve that? More and more of my trader students have been doing so. They have found the three keys to fully unlock their potential for successful trading as an Independent Trader. Let’s have a look at these three important keys.
This key is a bare minimum requirement. Entering a Formula 1 race without having a race car is certainly a bad idea. Actually, though, this first key is the easiest to obtain either by creating your own trading systems fully tailored to your needs, or, by adopting someone else’s systems that fit your beliefs and your style of trading. Even though there is no Holy Grail system or indicator out there, you still need good systems! Just like simply having a competitive car is insufficient to win you the race, this first key alone cannot fulfill its purpose if you do not obtain the 2nd key, too.
This key represents the biggest challenge for traders starting out with new systems. Typically they just want to jump into the markets and trade right away trying to catch every move they see. This might be called Naive Practice with the loose goal of getting better over time – though the amount of time might take many years. Worse, this approach creates drags on progress such as: unstructured practice, bad habits, unuseful beliefs, and emotional hurts. Undoing all these can take longer than starting with useful mental states, beliefs, processes, etc. from the very beginning.
I recommend getting started the right way – which seems slow at first, but is actually a much, much faster path to becoming an Independent Trader. Please understand that you will only find the Holy Grail in-between your ears. It is the process of developing your trader skills so to attain the 4 Cs rapidly! Do you want to spend years being frustrated, generating marginal results, and improving in slow motion? That takes just too much time and has a very high emotional cost.
You want to move fast and develop your trader skills growing through exponential skill growth. This will allow you to trade with the 4 Cs very soon – ideally within the next 12 months.
But how can you do that?
The most effective method of rapid trader development involves Deep Practice – a drill routine during which you grow quickly through repetition and making small mistakes. Making mistakes while you perform slightly outside of your comfort zone (healthy stretch) represents the key in your trader development process. Imagine a skydiver student going through practice drills in a wind tunnel. The wind tunnel allows the student to speed up the learning process by practicing proper form, making few mistakes, repeating, and testing new moves – all in a fast-paced environment of accelerated growth. In just an hour or more of tunnel time, the student gains the equivalent level of experience from many weeks of plane jumps for only 20 seconds of freefall time per jump. Imagine the savings in time and expense of using simulation to become a competent skydiver!
Simulation accelerates greatly the trader development process as it provides a safe, secure, and structured environment where you can fully experience and deepen the understanding of your system. Imagine the savings in time and expense of using simulation to become a competent trader!
First, you want to reach the Competence Level (see figure below) by becoming a “Simulation Pro”, meaning being able to execute the trading systems with consistency in a simulation environment. Reaching “Competence” typically requires around 100 simulated trades or more per system. Each trade pattern is very special in its own way so lots of practice trades reveal pros & cons and the nuances for individual opportunities. This then enables the trader to develop a sense of trading pattern quality.
Source: Trader Development Path (adjusted from Bill Williams, Trading Chaos)
Only after you have mastered consistency with a cool, calm, and confident mind in simulation mode do you want to approach the Live Markets with the goal of becoming a “Live Markets Pro”. Achieving Competence in the live markets is more difficult due to the added complexities of live trading. In effect, a trader needs to build his Live Market Process first before reaching Competence. This stage typically takes 3 months.
Where are you now on the Trader Development Path model? You can relate where you stand through your dominant emotions trading. Which emotions seem to match you most?
Even after reaching the Competence Level trading Live, however, a good number of traders still hit a wall. Even though these traders may have a good performance in the markets, something is still missing – the 3rd Key! This key transforms the trader into an Independent Trader with his/her own specific style of trading the systems.
Some traders can be quite successful owning just the first 2 keys, however, most will start to struggle somewhere along the way without the third key. Many of my trader students improve their skills greatly, but the better they get, the more important their Psychology becomes for determining success. Compare this to a race car driver who knows the course intimately and performs well during training, but in the race, comes in behind the pack.
Can you identify with this? I guess most can.
As you develop as a trader, look at and work on improving your psychology and mental state.
As an example, many traders find just a few, but powerful unuseful beliefs – of which some are emotionally charged. Often, these surface in situations where the trader’s “buttons get pushed.” These charged emotional states then arise as a result of emotional hurts accumulated over the years. You want to let go of that hurt that holds you back. Though getting rid of charged beliefs is not a big issue, not every trader is ready to put in the work or effort to release them. Releasing emotional charges allows a lot of positive energy to find its way into your life and this has very liberating effects.
I get feedback repeatedly from students who do the releasing work to see their trading results improve and also to find a lot of positive changes happen in their personal life.
Can you imagine trading the markets in a Cool, Calm, and Confident way with Consistency? That’s the goal. To get there, work on obtaining your three keys.
PS See examples of Independent Traders from my Masters’ Class!
The Market Rewards You with BigRs, But…
Your Game, Your Rules – Winning Your Trading Game
Trading Visual Price Patterns is a Bit Like Hunting for Fish
How Your Learning Type Determines Success (Part II)
The Trap – And How My Cat ‘Dolfi’ Got Caught
Become the Hunter Yourself
Deliberate Practice and Trading Mastery
A Structured Approach to Trading Mastery