Build on a sound knowledge of the basics

By on Sep 18, 2017

I recently watched a martial arts training session. It was a mixed group made up of both very advanced members wearing different degrees of black belts and raw beginners starting their journey with their blank white belts.

I wondered how people of such huge differences in experience could train together. Surely the beginners would be overwhelmed, or the experts would be bored and find they had nothing to learn.

But after the warm-up, the training focus was on absolutely basic techniques. And the response of the advanced students was truly fascinating: they did the same exercises with full focus and dedication. There was no “been there, done that” attitude.

And one of the most underappreciated keys to success became:  it’s all about getting the basics done right. That is a lesson that applies very much to traders.

Sure, those black belts can easily turn wooden boards to splinters, but it all starts with a solid foundation. Neglect that foundation and there is no support to build upon. It might work for a while, but it won’t be stable and suddenly your wrist is broken, not the board.

I fear not the man who has practiced 10,000 kicks once,
but I fear the man who has practiced one kick 10,000 times.

– Bruce Lee

With trading it is, of course, the same thing: you need to focus on basic techniques and building blocks.

I often get asked when running one of our webinars why I’m running them if I could be making a killing in the market instead. My answer is usually:  “Presenting webinars forces me to focus on the basics of our craft.”

Running a webinar reminds me not to neglect the very basics of our strategies: how to read price action. What is the trend? What do those candles tell me about the behaviour of market participants? Why is the stop loss where it is?

A picture I always like to use is that of a concert level piano player. Supposedly at his/her level, it should be all about the finer accentuation of certain notes and phrasing. But guess what: they still practice their basic techniques for hours every day. In just the same way as the martial arts students, I observed.

So I urge you to join those experts in their fields – focus on the basics and revisit them frequently. For they are the building blocks that form the foundation for our long-term success in the markets.

Perhaps you want to move to trading options?  If you do, proper risk management and chart reading skills will be just as necessary as they were when you were trading Forex, CFDs and stocks. Those concepts are self-evident and eternal. The next tulip or bubble won’t change them and they will still be valid and useful long after Brexit and Trump are just a faint echo in history.

At Trade With Precision, we are not investment advisors and therefore can’t give you any specific investment advice. But here is the one piece of advice I can give you – start your trading journey with a solid education. Focus on the basics and make sure you get them right even if you’re shaken from your sleep at 3 am. Those foundations will pay you huge rewards in the long run.

That way, the next time somebody asks you about a specific market, you can tell them: “I don’t know – but let’s have a look at the chart together and find out what’s going on.”


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