Subscribe Feed (RSS)My 4 Stages of Trading Career
June 13th, 2008 by eyal | Filed under Personal development, Trading Plan, Trading Resources. |
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I’m recently going through a bit of a paradigm shift in the way I view trading. It started sometimes earlier this year I think and recently has been reinforced. Like most traders, I went through the typical learning process I think and have made most of the mistakes possible too. With the exception of blowing out and pulling stops. Survival has always been an underlying key theme for me so thankfully I never went through that.
So, starting in Stage 1. In the very beginning I used to view my role as a trader in buying and selling stocks trying to sell it higher than I bought. Either selling short first or buying first has always been immaterial.
Then, after a while I moved to Stage 2. I got a little more experienced and I started seeing my job as developing my trading plan and executing it consistently. Later on that view has evolved again, following my plan isn’t an objective, it’s a pre-requisite if I wanted to make money in a consistent way. I also learned to accept it’s not possible to follow your plan 100% of the time no matter how mentally tough you are, that’s just how humans are built. Luckily that’s not needed to make money, as long as you’re not too far off from 100% (90% or 80%, who knows). Incidentally, Automated Trading Bots also can’t be at 100%, first of all they’re designed, built and configured by humans, secondly technical problems are never going to be zero.
Anyway, with more experience I moved to Stage 3. I started viewing my job in the context of my edge, analysing it, refining it, testing it and (hopefully most of the time) improving it. This lasted quite a while and is still something I’m involved in.
However on a macro level my view has now changed again, to Stage 4. In simple terms, I now see my job as finding the best ways to put my money at risk in the financial markets. Buying and selling? That’s my broker’s job. Executing the plan? Sure, either a given pre-requisite by me or let a trading bot do it. Refining the edge? Yes, an ongoing ‘maintenance’ job. So the real objective now is making the most of my limited resources - time and capital.
What this means operationally is that my aims are to: 1. Automate whatever I can in areas where I’ve become the bot, if I can get it to fully automated mode - great, if not then I’ll get it the closest I can. Aim number 2. With the time saved as a result of achieving aim number 1, I intend to explore different markets, trading styles and timeframes that are of interest to me and that I’ve not touched on till now since I was too busy being a trading bot or mentally recuperating from being a bot. An underlying theme for me as always is I need to pace myself instead of moving from 5th gear to neutral and back again every few months.
P.S. I’m pretty certain there will also be Stage 5 at some point, what’ll be? Time will tell..
