When you are involved with any skill-based endeavor like trading, it is critical that you measure what you do. When you want to get good at something you must measure it. You must have a way of knowing how you are doing with respect to the variables that make up the process … this involves getting feedback. Now, there are some traders who would say, “All the feedback I need to know is if I am making money or not.” To this I would reply, “Then why not just go to Vegas and gamble, because if you are not measuring, tracking and documenting your trades you have virtually nothing with which to base your progress upon.” And, if you are trading by chance, you my friend are gambling. Basing your trades solely upon profit and loss is an ineffective way to measure your “mastery” of the process. If you don’t know what you did right or wrong, then you can’t duplicate the good or eradicate the bad behavior. Without this knowledge, you are trading on chance. Trading mastery involves “skill building.” Skill building is critical to any performance-based effort because that is the path to getting better.
Actually, there is a skill building equation, which is:, P + EF + FL + H = SK (protocols + effective routines + feedback loops + habituation = skill building). The essence of skill building hinges on being self-aware. If you are self-aware then what you do, how you do it, the frequency with which you do it and the order become variables that you are not only able to track, measure and document, but you will be able to manipulate as well.
Firstly, skill building involves a set of trading protocols. A protocol is a series of sequentially ordered steps toward an aim or goal. And, protocols can be found across the board having to do with anything that involves performance; like medicine, law, accounting and sports, to name a few. Trading protocols are made… Continue Reading
