Trade The Journey

Trade The Journey

Trader Work Ethic!

Top of the morning. Sometimes a topic comes to mind during the week, and other times a topic emerges as I began typing. Writing can be difficult if you’re prone to getting writers’ block.

Usually, I brainstorm before writing, recounting my experiences throughout the trading week. This week I thought it would be best to talk about the work ethic a trader is required to have. The market isn’t a casino and professional trading isn’t supposed to be exciting all the time.

I’m not sure about you, but trading entered my life as an extension of managing my finances. My finances were in dire need of improvement, so I started reading books on self-improvement. Naturally, as my savings began to accumulate and my situation improved, I looked for ways to earn a return.

I knew very little about trading; I only knew that it was one of the most exciting and challenging games that could be played globally. The first strategy I encountered is the traditional value investment strategy. You buy a company’s stock and hold the stock for a lifetime, amassing wealth along the way.

Value investing seemed like a practical idea and strategy and the sage of Omaha endorsed this strategy for all would-be investors. I later discovered that value investing was too slow for me so I naturally gravitated toward swing trading.

Eager to learn, I read everything I could get my hands on regarding investments, and then I moved onto learning about trading. For the past four years, I have spent every day learning something new about trading and investing. It wasn’t until the fourth year; I began to grasp the required work ethic to succeed in trading.

Trading isn’t a sometimes thing, or I’ll get to it tomorrow type of endeavor. It’s an everyday commitment. I mistakenly thought that once you placed the trade, waiting for an exit point was a matter of timing with very little work required from the trader.

 

 

I’ve talked about managing the trade in a previous post. Now I’ll talk about the work ethic required. It isn’t easy maintaining an edge in trading without having a passion for it. When you first begin trading, it’s about finding the holy grail. It’s exciting trading to be in the market without rules or boundaries.

If the stock looks like it’s heading higher, I see a screaming buy and without recourse, I enter a position. The stock heads higher for a day or two, and then boom, the stock hit a monthly low. The novice trader is left scratching their head.

A trading edge comes in many forms. With experience, you learn about the nuances of trading like referencing levels, tracking sector and competitor companies, current events, and a slew of statistics that all need to be tracked daily.

Here is where a trader’s work ethic rises to meet the challenge or faulters. After a trader learns what they need to track and analyze, they should next work on disciplining themselves to complete the tasks each day. Discipline is an attribute that can be learned and it is a big part of the trading game.

Can you do something repeatedly each day with the same energy and intensity? Do you have the drive to become a skilled trading craftsman? A chart artist?

These levels are only reached by few, as most, lose money trading.

Earlier this week, I was tracking my position and completing my nightly homework when I remarked to myself, “This is a lot of work.” I’d say it takes me close to two to three hours nightly to assess my positions.

This number doesn’t factor in the chart reading and diagnosis I complete throughout the day. I enjoy trading because of the challenge it presents to an inquiring mind. I have a passion for trading.

You never know what the market may do next, regardless of your experience or skill. “No trader can beat the market.”

Every night, I review the charts, current events and recount the stock’s story for the day. Were there any news events? I also record how I felt about the stock’s movement and my management of the position.

 

Sounds easy, not quite.

All of your nightly work has to be completed as objectively as possible. I can remember a recurring thought I had as a novice, “One day, I’ll know enough to just look at the charts or report and know what to do.” I attribute this thought to my unwillingness to accept the workload of trading.

Trading is an exercise in critical thinking. The answer or method of action is never clear cut; It’s more of an “if” and “then.” Howard Marks calls it second-level thinking, thinking beyond the most obvious answer. A large portion of the time, there are exact levels that the stock has established as support and resistance.

It takes discipline, knowledge, and experience to identify things that that the average traders miss. Looking at the charts daily, you begin to identify places where the stock is likely to go and not go. For example, the volume can be an essential clue to the move’s strength when a stock hits resistance.

I wish I could list all of the things I see and notice, but most of the details are probably somewhere in my subconscious. To date, I’ve probably seen close to thousands of chart formations. Not even close to what some of the best traders have seen.

My suggestion is to make trading a part of your life. For me, trading is my life. I don’t think about trading; I just do it. The practice part is similar to Micheal Jordan or Lebron James working on their craft.

A solid work ethic only improves your trading skills and increases the likelihood of finding your edge. Once you find your edge, you have to continue honing your edge to perfect your style. Notice I mentioned your style, not your trading results.

There is no holy grail or perfect system or ceiling, only constant improvement and learning. In the truest sense trading is about self-control.

I’m sure if you ask Micheal Jordan or Lebron James about work ethic, I’m sure you’d get the same answer.


This past week:

This week was challenging not because of the discretionary expenses but the fixed expenses. They say in business; the fixed costs are what sink the ship. I believe it’s the same in personal finance.

I have to do better-cutting memberships I no longer use. I’d like to give myself a “D+” for poor budget management.

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