The key word here is “deliberately.” Many people just try to passively learn to trade, reading a few books and then jumping in to make some trades…hoping it works out. To deliberately improve means taking precise steps to foster self-awareness so issues can be spotted and addressed.
1. Get Help When Needed
I try to remain self-aware enough to assess whether I am following my trading guidelines. If I am having trouble sticking to my guidelines, I have a couple other traders I reach out to, send my charts to, and we exchange feedback and ideas on how to get my focus re-aligned on the right things. These are guys who know my trading, my personality, weakness, strengths, etc.
Not everyone has a network of traders they can trust. Even so, you can take deliberate action to help someone else help you. One option is a setting up a trading referee (see: No Trading Mentor? Utilize a Trading Referee). This can be anyone, and doesn’t need to another trader. Sometimes we are just blind to what we are doing, but someone else can instantly spot what we are doing if they have an idea of what we are supposed to be doing.
2. Avoid Others Opinions
Note: This step assumes you already have a trading plan and a system you trade.
I deliberately avoid reading financial news and other’s trade ideas. I do like reading about trading and others stories involving it, but when I read such a book or article I read it as entertainment and deliberately form a partition in my mind between what the book discusses and my own trading. I trade a strategy…it doesn’t matter what is happening in the world or what someone else’s opinion is. I simply stick to my strategy. That is the only way to be a successful trader.
This does not include in training. I have been trained and mentored by some great traders….and I DID listen to them! But once you have a trading plan developed and a plan of attack for the markets, don’t deviate. Also, avoid things that may lead you to deviate from the plan. You may have one or two people who know how you trade that you listen to (see #1), but other than that it is best to avoid other trader’s trade ideas. Come up with your own plan and stick to it.
3. Monitor What You Do Every Trade, Every Day
I keep screenshots of my charts each day–labeled by day–that include all my trades, analysis markings and thoughts written in text notes right on the chart as the day is progressing. It is an easy way to track exactly what I am doing and in what context I am doing it. I review every chart at the end of the week and the end of the month and highlight missed trades, extra trades taken, trades that I executed perfectly and trades that I mismanaged based on my guidelines. The goal here is not to try to improve my win ratio or anything like that. Rather simply to improve my mental process and awareness so I am better able to implement my guidelines. In other words, this my spot-check to make sure I am actually following my trading plan. If I am not, then I proceed to step 1.
See how these all tie together? Step 1 involves making and formulating a plan and making sure that I stick to it. Step 2 gets rid of distractions which may keep me from following that plan. And step 3 monitors my performance, and reinforces the idea behind steps 1 and 2—assuring that I am simply following the plan I have lain out for myself.
Cory Mitchell, CMT