The Acquired Skill of Trading - A Definitive Trading System For the Intermediate and Pro Level Trader

Chapter One

Where Are You and What Do You Want?

Trading careers begin with an aspiration, from which point the process becomes more difficult.

Undoubtedly, few would take issue with the above statement. Who among us has found this business to be uncomplicated or easy? We try and try again, small gains are often followed by large setbacks. Discovering a new methodology only to witness it's failure when put to hard money.

How can success elude us after months then years of effort? Can it be that after studying for thousands of hours and examining an infinite number of charts, it is not enough?

The answer is, it most certainly is not enough. Being industrious has not delivered the anticipated results because our efforts have been concentrated on acquiring the prerequisites. The prerequisites albeit necessary and highly important require no particular skill and should be considered housekeeping details. That's right, it's no different than reading and writing is very important in becoming a great doctor. You need the prerequisites but don't expect to cash in with nothing but the reading and writing component.

The trading prerequisites include; studying everything you can get your hands on, research of every topic that may provide the edge, classes that offer just what you needed to know, software that "takes all of the work and stress" from the trader, webinars galore, brokers, trade rooms, data feeds, newsletters. Congratulations, you have gained a great deal of knowledge and may very well have spent a sizable amount of money. Many of us obtained the functional equivalent of a college degree. Lots of study, and having spent plenty of time and money.

Now having decided to be an independent trader, we are stymied at the realization that we can't make this job produce a reliable source of income.

What's missing? The gap between what you have learned and what you have yet to learn is the real time experience and awareness that you would gain if hired by a successful trading business. Actually practicing within the constraints of a working business model.

Our pro trader aspirations can be further exasperated by the marketing campaigns of the developers of software systems and others whose business depends on selling us some form of "Tool". The promise of a device or system that can actually determine when to buy and sell.

What a great gift idea for the kids! It's as though we can buy anything we need to be a trader. Sounds almost too good to be true.

Alright then, we get it. There is more to this than first we believed. Our motto is and will continue to be; Whatever it takes! With the proviso, Let's not lose the farm!

Once certain that trading success depends more on one's collective abilities than the purchase of a new gizmo, our focus can be turned to connecting the links between having acquired the prerequisites and the goal of trading for a living.

There is no shortage of research done on the subject of goal accomplishment. Any study of the topic finds a common thread that expresses the idea that success, be it personal or business, follows a path from Idea to Action to Desired Result. An active goal oriented process must be undertaken. You have brought the Idea to the surface. The prescription requires that you next take Action. Let's regard the Action process as getting from Point 'A' to Point 'B'.

Point 'A' can be characterized as having our prerequisites, yet, inconsistent results and perhaps a blown account or two. Point 'B' is a clear routine of month over month consistent profits. Point 'A' does give us a general grasp of the "Business". We know about the Business. We can talk about the Markets; Ticks , Leverage , Multiple Units , Lumber is thin, Hogs are Oversold, Funds are net short Beans, Juice is Long. Okay good.

If we therefore Know about the Business [Point 'A'] and yet are not profiting [Point 'B'], there must be something more.

The simple fact is we haven't nailed down the Skill of Trading. To actually become a SKILLED TRADER is the last hurdle, the decided goal. The skilled trader knows how to trade and equally important, how to manage the Complete Business of Trading. You can't hope to succeed without both.

The failure rate among all new businesses, frequently cited near 90%, is less favorable for traders. The government required warnings published in this book, and nearly anywhere you find the subject of trading stocks and futures are not overstated. With these kind of odds stacked against success there leaves little room for error on the individuals part. It may be time to define a coherent business process that seems logical and organized, a plan that respects the fact that this business is no cakewalk.

You probably have read or at least heard of books that characterize successful trading as an Art or being in a Zone. Such characterizations are fair enough and the point is well taken. I suggest another way of approaching the process, that is to treat this as a Skill Based Occupation. Skills can be acquired and improved by long hours of practice. While at work developing our skills, each of us as individuals can and must decide if we have the propensity required of the profession. That's right, and make sure you get this, the trading business is not for everyone and only you can know if it's your calling.

Is there really such a thing as a "Natural" Chef or Doctor or Carpenter? Maybe, but I don't think so. Could it be these folks are instead, well practiced and conscientious?

General observations of highly skilled individuals reveal they tend to put in the extra hours and even enjoy their work. Have you found in life that it is much easier to become good at something if it is enjoyable? Earning money can go a long way toward making an activity something we enjoy doing. Let's hope then that trading is something you want to do and becomes what you enjoy.

Once a skill is refined to a level that is clearly above the norm, we will hear it said " He /She has it down to an Art or Science". Fine, but we do not have to begin our career at the "Art" level and we do not have to become an artist. Let us strive to develop the Skill of trading. We can be satisfied with ourselves just knowing that a high level of Skill has been achieved.

The Skill can more readily develop with a sound basis from which to study. The absence of a written detailed guide can cause us to spend a good deal of time studying material that once learned proves to be of little value.

At this point in your career you are probably genuinely able to apply and practice nearly any trading concepts if only they are clearly defined. Thus, we want and need a Template from which to study and put to action.

In addition to the actual mechanics and skill necessary for trading there can be another road block. It is the knowing and believing mindset that must exist and be in phase when practicing and refining the chosen concepts. Accordingly you are not likely to stick to a process long enough to become experienced if the system fails to deliver positive mental feedback. Conversely, if results can be found at the early stages you will have the confidence and motivation to stay the course and gain the needed experience to succeed.

There have been more than a few aspiring traders that have come to believe individual trading really can't be done. For one reason or another this is not working and frustration has overcome the resolve to continue.

Perhaps you are in the camp that argue this business is just for those with a staff of 20 PHD economists. High speed and sophisticated hardware/software that allow trades at 10,000 times a second. Meteorologist watching the latest weather etc. etc. The lowly individual has not a prayer. Yes there are trading firms who have every resource imaginable. Large funds, banks and commercial hedgers provide the buying and selling power that fuel the moves we strive to be a part of. Without the big boys the markets couldn't exist. We will not compete with these guys, we should however understand and appreciate the important role they play.

It is not difficult to believe in a concept that is clearly defined and can be tested. Show me the blueprint, show me how it works and I will test it for myself.

This book undertakes the challenge of providing the intermediate level trader, one who has the all important prerequisites, a model from which a successful trading venture can spring. Begin now treating this industry as a profession. Professional level skills are distinguished from others by the single notable feature of being well paid. Concentration should now be focused on becoming an expert Practitioner, a Pro.

So then, where to start? What about a personal reality check. Are you really up to this? Do you accept the inescapable truth that the trading business is more difficult to master than most other occupations? Are you willing to work and learn a business that punishes mistakes with utter indifference to your sensitivities? Are you attuned to the fact that hope will never supplant self reliance and taking personal responsibility for becoming highly skilled at ones profession?

The problem solving process begins with the often abused step of correctly indentifying the real cause of the problem. Very likely it is not the software or some other extraneous part of this business that is responsible for the high rate of vanquished...