Trading is a performance sport. | stockbee


Trading is a performance sport.

Trading is a performance sport.

You have to actually trade to see how things work, just knowing does not make you money.

When you read a trading book or watch video or subscribe to a site you might get an idea on how to trade but unless you can perform it yourself it is of no use.

Performance can be learned in many ways, but all the ways involve something which you can not avoid. And that is actually performing the act hundreds of time and getting it right every time.

If you perform say 500 trades using momentum burst method you will develop performance skills. It will become effortless. You will know the intricacies of it.

A basketball player, tennis player or golf player any other player is in same category. What they indulge in is in performance sport. Knowing how to serve a top spin and watching how to do it on Youtube and reading a book about it will not even qualify you to become a ball buy.

And then the individual investors  think they can trade knowing nothing or by just trying few things. It does not work that way and it will not work and it has not worked for hundreds of years.

Yet come January lot of individual investors will attempt it , they will try it for few weeks or months and give up. How many of the people do you think will persist till say March or June. Even if they persist how do you think will do.

One of the first starting point of performance sports is you need equipment and facilities. You can not play tennis unless you have a tennis racket and court to play on. You can not be a golfer unless you have clubs and golf equipment.

Same way you will not be able to perform as a trader or investor unless you have proper trading tool and broker and willing to pay for it.

In the beginning of every year I get lot of emails from newbies or individual investors who want to get into the game. The first advice I give them is first get the right software and broker.

Some understand that , majority do not. They want to as far as possible avoid paying for a software or use proper broker. They will go to great length to try and find a way around it. They feel it costs too much.

Which to a large extent is fallacy.

The same people spend over 100 dollars on their cellphone or pay 100 dollar or more for TV service for sitting on their butt and 100 dollars or more per month  for their kids or spend more in many other services without blinking an eyelid. But don’t want to spend 20 to 30 dollar on data service for trading.

Or look for some shitty brokerage service that offers them free trades.

There is no polite ways to tell these people that you are unlikely to ever make it in investing or trading unless you are willing to spend for basic things. It is like trying to play football without having a football.

Performance skills have another attribute to them. There is a degree of complexity involved in them. And you need to start at right level and build from that level before attempting highly complex thing.

Every year in my daughter's dance class they have a dance show performed by dads of the girls called Dancing Dads. Dads spent around 6 months preparing for this with weekly practice and more frequent practice closer to the event. The dance teacher tries to keep things as simple as possible so that amateurs can do it easily.

Inspite of that it takes serious practice and commitment to do those basic things. She constantly supervises individual dancers. Corrects the flaws. Shows steps hundreds of times. If someone is struggling she spends special time doing it with that person multiple times.

All performance skills are like that.

If you understand and appreciate it that it is performance skill then you will also set your goal accordingly. You may want to win the Olympic gold medal in Tennis , but if you do not have right equipment and skills you will go nowhere.

I get lot of beginners asking me they want to be position trader. Wow! Great.

Why . Oh I am very busy in my office or business and I don't have much time.

Seriously think about this.

If investing and trading is performance skill and you want to learn it and you are going to do it only 3 to 5 times in a year (position traders hold positions for long time and have very few trades in a year), what are your chances of success.

It is like saying I don't know much about golf but I just want to participate in Masters and the Ryders cup.
You can dream about it but it is not going to happen.

To learn to trade if you do 100 to 500 trades your chances of learning performance are high. If you do it 3 times in a year , there is not going to be enough learning to correct your own mistakes. You can not win or come anywhere closer to winning a tennis match by serving 3 times in a year.

In order to learn to be a position trader start by doing basic simpler things like trading a week or few weeks swings. Master that first and then graduate to next level.

Those who understand that will be around till year end rest of the enthusiastic beginners will be out by March or even earlier.

Performance skills like trading can only be learned by performing them , watching others perform them and emulating them, and by constant coaching to improve performance.

1 comment:

Will Leung said...

Great article! You are my best mentor in my trading carrer. Thank you! Love your blog.