ForexSpirit

How often do you evaluate how well you are doing at becoming a better trader?

It’s probably not a question that most of us would even think of asking ourselves. Yet the benefits of asking and answering this question can accelerate us along on our journey to becoming who we want to become.

Being critical of where you currently stand and what you are currently accomplishing can provide valuable insight into your progress.

One possible question you can ask yourself is: What process do you use to gain more knowledge?

I have been trying to answer this question myself over the last few days. Once I had reviewed how I currently gather new information and evaluate it, I wanted to see if I could improve things so that I’m able to get more results out of the time and effort that I put in.

During the last four years I have spent a considerable amount of time and energy learning how to become a successful, profitable trader. I’ve read everything I could get my hands on, books, magazines, more books and online forums. Brokers have been tested and researched to find out how good they are. I’ve practised various strategies using demo accounts mainly, but on occassion in my real live account (and not always with reduced leverage such was my foolishness). I’ve trialed multiple signaling services. Messed around with a ton of different charting applications.

Each action increased my trading knowledge and lead me to where I am today, but I’m finding it that I am increasingly seeing diminishing returns. I have to look harder and longer for that new nugget of information or a fresh insight into a problem.

I still frequent online forums rather a lot, but find the signal to noise ratio almost unbearable now. I have made a conscious decision this week to limit my forum visits to only once every few days. Instead I hope to be able to write more content for my blog here.

I took an extremely extended vacation away from visiting the MoneyTec forum at one stage, as I found that I was finding almost zero value in any of the postings for the time I was spending having to search through them. Instead I switched to the Forex Factory forum, which was in its infancy and was small and easy to catch up on. Forex Factory has grown quite considerably now, and while nowhere near as bad as the vapidity of the MoneyTec forum in its heyday, I just don’t feel like it’s worth my while trawling through all the new postings trying to find something that might interest me.

I will just endevour to visit them infrequently, looking to find the odd interesting topic as forums can still be useful as jumping off points to other interesting websites or trading resources that are out there.

It will also allow me to focus more on reading some other trading books, even if the same issue here is true (that of trying to find any new ideas or insight) but to a lesser extent.

Writing also allows me to clarify thoughts and ideas I have in a more crystalised way.

As what I assume is one of the final parts of the mentoring programme I am taking with Dirk, I now put together my own daily briefing e-mail every morning. Writing the daily briefing forces me to mentally review the prior day’s activity and to then put my thoughts and reactions down in print. I then turn my attention to what is going to happen over the coming hours and days. I will take a look at fundamental factors (such as economic data releases, central bank meetings or speechs, and geo-political events) in combination with any major technical factors (such as fiboancci levels, prior support and resistance levels) and how price has been acting lately. In writing the daily briefing e-mail I am called upon to forumlate a plan of action for the coming today. This process forces me to think about what future events are possible, and how I will react to them.

Instead of expending all my time and energy looking to vacuum up increasingly small, hard to find bits of trading knowedge, I am instead going to hopefully find that spending that time and energy on forcing myself to be more active in forecasting potential market dynamics and how I will react to them will be more productive and benefical. This shift in focus should also help in highlighting any areas of weakness that I surely still have.

Writing helps to formulate all those ideas and thoughts that are spinning around in our heads into something cohesive. It brings thoughts out into the open, making them more real. Thinking a thought and reading that same thought back after you’ve written it down can be quite a different experience.

Writing can be a highly beneficial tool, even for a trader.

If you don’t currently write a trading journal I would recommend that you begin to start writing one as soon as possible. It can be one of the greatest learning tools on your journey of becoming a great trader. Make sure that you are brutually honest with yourself in what you write in the journal. Don’t sugar coat your mistakes, it won’t help you learn from them. As you write in your journal over the weeks and months, it becomes a treasure trove of useful pieces of information. It can potentially help you spot destructive trading patterns that you can become prone to falling for but just don’t realise most of the time. You might be able to deduce trends in your winning and losing trades. You could then look to reinforce those habits that lead to winners, and change or eradicate factors that lead to losers.

Writing is an active process. Reading and learning are primarily passive. The most important active process that you perform as a trader is entering and exiting trades. This most likely takes up very little time in comparison to all the other primarily passive trading related activities that you undertake such as research and reading. Writing a trading journal is an additional active task that can help you feel more engaged as a trader. It can help provide substantial positive reinforcement if you spend the time and effort to allow it to become part of your daily trading routine.