Everyone should have realistic expectations when they start out in any endeavour.

The following list sets out some expectations that are part of the realism of trading:

·   It takes work to make money trading

·   It takes knowledge to make money trading

·   No matter who you are, you will have losing trades

·   No single trade is likely to make you rich

·   Only expect to make money if you understand and apply money management principles

·   Expect to take risk in order to trade

·   Make your profit expectations reasonable – 100% a month probably isn’t a reasonable expectation

·   Don’t expect that anyone is going to have 100% winning trades

·   Expect to study markets, strategies, and psychology if you want to be a successful trader

·   Don’t expect to get rich quick

·   Expect to pay for your education (college wasn’t free was it?)

·   Expect to keep careful records so you can see what you are doing right and what you are doing wrong

·   Expect to be responsible for your own trades, and recognize that no one else is

·   Expect to go through a learning curve before you are a good trader

Obviously, this is only a partial list, but I want to emphasize the importance of realism over fantasy. Believe me, if I could predict which trades on cheap stocks would make more than 5% or 10% in a short time, I would be placing them. Trading is not an easy business. In the heyday of day trading in a super bull market only about 16% of the day traders were making money. If it were easy, everyone would do it. It takes work, persistence, regular study and good money management to be an overall winner. Luck may be with you on some trades, but reliance on luck will ultimately lead you to the poor house. Make the effort and the expectancy of making money is more likely to be fulfilled. If you won’t make the effort, then don’t expect success. It is really that simple

The seminar went well, with the 2 day seminar covering material that is normally taught over two months! I remember how it was like for me when I first started, with so many new terms, concepts and techniques. The Indonesian group is very enthusiastic, and they have asked me to visit them again in July. If they practice well, they may even qualify for Shinkendo’s first ranking.

http://shinkentrader.com/blog/

Current research has enhanced our understaning of mastery. Here is an article from Innerworth…  While trading the markets, there are times when the little child within us shouts: “I don’t want to wait. I want it now.” But sustained profitability takes time. In his book, “Enhancing Trader Performance,” Dr. Brett Steenbarger argues that superior performance develops in three stages: Initiation, Development, and Mastery. Many novice traders dream of mastering the markets and achieving extreme wealth; they want to make huge profits now, but it is necessary to go through the initiation and development stages before achieving mastery. Why is it necessary to recognize the stage you are in? Eventual success in a challenging endeavor, such as trading, requires motivation. And cultivating the proper motivation requires that one set specific, realistic goals. Setting specific goals is essential for achieving high levels of performance. They allow for direct feedback. You know exactly where you stand and what you need to do next. Setting goals that are unrealistic usually leads to disappointment. For example, you may aim for a 20% return on your trading account, but if that is not a realistic objective, you end up failing, feeling disappointed, and giving up. If you set more realistic goals, however, you feel satisfied when you achieve them. You feel optimistic and ready to tackle the next goal in earnest. By realistically acknowledging where you are at in your stage of development as a trader, you can set goals that are consistent with your abilities, achieve them, and feel you are making steady progress.

Let’s review the three stages of development and what you should do in each. In the initiation stage of development, a novice trader explores the new field of trading and enjoys the process of discovery. Trading is pursued mostly because it is fun. In addition, many traders, who end up pursuing a career in trading, usually experience early success. For example, in our Innerworth interviews with seasoned traders, many reported that they became hooked on trading while realizing easy profits in a bull market. They did well, had fun, and thought they had special talents. These experiences of success set the foundation for their later mastery. During the initiation stage of development, the main goal should be to have fun with the new field. A novice trader should not focus on profits, but on managing risk. Trades should be viewed as practice trades. The goal at this stage is to develop an intuitive feel for the markets, not to make substantial profits.

The hard work of mastering the markets begins in the development stage. During this stage, a trader should work hard to develop specific trading skills and to develop a basic sense of competence. This is where a more serious commitment to the field begins. The trader in the development stage concentrates on learning different strategies and trying them out. A great deal of basic knowledge and skills is gathered, just as one would study any new profession. At this stage, it is still not wise to focus on performance goals, such as achieving a 20% return. It’s useful to distinguish performance goals from learning goals. For novice traders in the development stage, it is useful to consider setting learning goals rather than performance goals. A learning goal is more modest and can be achieved more easily. It involves breaking down the larger goal of eventual mastery into specific steps that are doable, and rewarding oneself after each step is accomplished. For example, a learning goal may be stating, “I’m going to study for 30 hours a week to learn a new trading technique.” The specific goal will not immediately lead to the larger goal of making a 20% profit, but it is easy to achieve, will lead to personal satisfaction upon completion, and in the long run, will contribute to the final stage of mastery.

During the mastery stage, traders try to reach their full potential. Reaching one’s highest possible level of performance is a primary motivator. At this stage, a trader may seek out the guidance of a teacher, mentor, or coach. Trading consumes most of their time. Intense focus is the key. The trader at this stage has already developed the basic skills required to trade. Now it is just a matter of actually working diligently to achieve specific financial goals, such as a 20% return on one’s trading account.

Whatever your stage of development, it is vital to set goals consistent with your current abilities. Mastering the markets is possible; it’s just a matter of setting the right goals and feeling good about the steady progress you make every trading day.