Experience in Trading
Becoming a full time trader requires an eminent amount of trading experience and also a passion to trade. Trading can be a full-time job however it demands a lot of attention and hard work. We need to start with a proper plan before joining the league of full time traders
Our goals for trading, the time and effort we put into our trading, the trading strategies that we choose to employ and our prior experience will all help to shape our road to trading success
Increased trading Phycology gained by experience is just a bigger part of our trading plan just like anything else. Every trader has the capacity to go from beginner to consistent profitability, but how they get there will depend on them
Definition of Experience;
Sometimes experience means accumulated knowledge and sometimes it refers to a single spectacular event. Experience is time we spend doing or learning something. E.g If you’ve had a job as a welder, you have welding experience
When someone is described as experienced, it means they have first-hand knowledge about something (both positive and negative aspects of it)
The only Source of knowledge is Experience because nothing ever becomes real until it is Experienced
NOTE: Successful traders approaches the markets as a serious business:- Read the Roadmap on treating trading as a Business
Why is it important to gain experience?
- The professional experience that we gain from the time we spend doing or learning something makes us a lot more confident
- It allows us work past our mistakes, develop coping skills and take away powerful lessons that can help us avoid similar errors in the future of our career – which can be detrimental to our success
- It can also lead to a multitude of opportunities. If we’re impress with our attitude and our ability, then this could convert into a permanent job role which will be waiting for us when we graduate/done doing or learning something
- Alternatively, we might have impressed a client so much that they suggest we contact them if we’re looking for employment. As we progress in our career, we never know how important these connections will be; hands-on experience will help us learn how to cultivate them
- It’s easy to give up and let go when things aren’t working out. However, the key is to learn to push through and avoid giving up so that when it comes to our future with the job, we’ll have the same determination at the ready because Employers/clients want to hire someone who is able to push through and face any hurdles and challenges in the workplace. The determination we attain from our experience can, therefore, be highly valuable because we will most certainly stumble upon difficult situations that will test our determination to carry on
- While anyone can learn a wide variety of trading strategies, especially day trading strategies, people who are already familiar with how markets work and a lot of the associated language i.e people that has already gained the experience of the markets will have an easier time navigating the world of active trading. However, this doesn’t mean that people new to trading should get discouraged, just that they should understand why it takes them a little longer to get their feet under them when compared to people who have worked in the financial industry for "years"
- We develop coping skills by learning from our mistakes. And what better way to make ‘excusable’ mistakes than during our work experience process?After all, we’re there to learn lessons and think about how we can improve the next time we’re in a similar situation. When we fail at something, it means we’re in the process of learning
Confidence comes from doing. There’s no substitute for real life trading experience
What to expect in our Trading Future;
Our trading future is hopefully long and prosperous but there’s a lot especially from treating trading as a business perspective that we’re yet to encounter. We’re not going to be a better, stronger trader until we do. Experience should not be underrated especially when we’re just starting out on this career path
If hopefully we already have a strategy and decided an approach to trade the market, we’ll want to Demo Trade our entire trading plan (routines, entries, exits, money and risk management) to gain enough experience and confidence in the trading plan before putting real money on the line
We need Experience to put together a profitable trading plan that we’ll demo trade over a series of large enough trades samples to know the metrics (Win rate, Loss rate, Average win, Average loss, Profit factor, Take profit ratio, Expectancy and Drawdown) of the selected Strategy as we also test our mental ability, phycology and discipline
After gaining enough Experience from Demo trading our trading plan over a large enough sample of trades, we’ll want to Live Trade with " low risk on small capital" to gain the experience of live trading environment because trading with real money involved, is a whole set of another Emotional and Psychological Experience compared to Demo trading
This will be preparing us for whatever route we decide to take after gaining complete confidence in our Trading plan i.e trading our money, other people’s money, or other firms money
"Information is not knowledge. The only Source of knowledge is Experience. We need Experience to gain Wisdom"- Albert Einstein
What does it take to become an expert or master performer in a given field?
10,000 hours of practice. It’s a common rule of thumb, popularized by Malcom Gladwell in his bestseller Outliers: The Story of Success
The principle holds that 10,000 hours of "deliberate practice" are needed to become world-class in any field. When psychologists talk about deliberate practice, they mean practicing in a way that pushes our skill set as much as possible. This means 417 days' worth of hours, or 3 hours a day for 3,333 days--a little over 9 years
The point is that we should be willing to put in the time to work towards Mastering level. It’s not something that happens OVERNIGHT
Trading is a BUSINESS - Treat it as such!!