Are You an Elite Trader? Insights on the Trading Process

For those of you in the US that are college basketball fans, we’re in the final throes of March Madness. This is the time of year when the men’s and women’s NCAA national tournament pits 68 teams over a two and a half week schedule of to-the-rafters excitement and over-the-top emotions. It’s a rollercoaster ride, even for people like me who are not necessarily into college basketball but find themselves drawn into the adrenalin rush. It’s also a metaphor for the repeated Cinderella story where the underdog manages to topple the anointed top seeded team and goes on to win the championship. This outcome, although infrequent, is not a matter of luck; although a bit of serendipity where the ball bounces your way can be a blessing. No, it’s more about the notion of preparation meeting opportunity; which brings us face-to-face with the point of this article and what it has to do with trading. There are way too many neophyte traders who come into this difficult process laboring under the misguided belief that all they need to do is buy a weekend internet course or learn a color scheme technique and they will soon be the next Warren Buffet. Well, this delusion could not be further from the truth. Trading is arguably one of the most challenging business ventures on the planet because it is a process fraught with emotional turmoil that is directly related to hard earned money being at risk. When you enter a trade, the risk activates stress hormones that translate into high anxiety, fear and a plethora of other negative emotions that can hijack your ability to execute the trade according to your plan. This is a humbling experience at best and really puts a lot of distance between the elusive desire to be a mogul and the reality of where you actually are…in the emotional and financial dumps. So the question, is how do you become a consistently successful trader and a member of the “trading elite?”

It all begins with having a realistic determination of where you are “exactly” in your trading process. It is assessing your strengths and weaknesses in an honest and straightforward way. Just like the young women and men who train their minds and bodies mercilessly to prepare at the core for going as far as they can with all that they’ve got; you must prepare your mind-set (emotional/mental and physiological state) to weather the unpredictable nature of the markets and maintain a steady hand on the helm. This kind of preparation is not easy. Essentially, to become an elite trader, among other things you must sustain a skill building mentality throughout all of your trading process which equates to process mastery. Process mastery and skill building can be illustrated with this formula: P + ER + FL + H where P = protocols (a series of sequentially ordered steps towards an aim or goal and includes strategies and setups); ER = effective routines (where you identify how you will roll-out your protocols ensuring that your behavior is consistent and methodical); FL = feedback loop (this variable involves paying attention to the feedback from outcomes and trading consequences by measuring, verifying and documenting the trade) this is where you begin to determine what is not working and address it one issue at a time; and finally the H = habits (this is where you are going through the first three variables and repeating them over and over until you have reprogrammed the bad habit by creating a new pattern of behavior). When you use this formula you are continuously engaging the best that you have. You are optimizing your internal and external resources.

Becoming elite in anything, especially trading, involves assessing where you are at any given moment and mapping out how you will get where you want to go. The aim should be to always put yourself in a position to skill build; that is, in every plan, every trade and every trade debrief. Now, will you falter, slip or otherwise misstep along the way? Of course you will. You are human and we are prone to making choices once in a while that are not in our best interest. However, if you aim to be in a position to skill build at all times, you stand a much better chance to be there most of the time and, who knows, as you develop greater capacity you do have the potential to nail it and resonate in the zone for extended periods.

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