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Evolution and growth – becoming more than you are

By Market Insight Prime Team  |  07/02/2018 08:28
”develop

Many people think that being a successful trader is a gift given by the gods - you are either talented, or you aren’t. The good news is that this assessment can’t be further from the truth. Trading is a skill which can be learned, just like any other craft.

Many great minds have pondered on the process of learning and enhancing our skills. How do we learn something new? How do we improve? And what does it take to finally become a true master of the craft?

One area where the path from novice to master is well outlined is martial arts. The progression from a white belt to several degrees of black belts - and beyond, depending on the martial art - is clearly defined. The great senseis have defined this process under the stages of Shu-Ha-Ri.

Shu
Shu is the first level of learning and can be understood as being like to receive or obey. You learn by applying rules given to you without questioning or further thought. You just follow through and adhere to the process

To apply this approach to trading, think of the following situation. You have just learned a new trading strategy. You know the rules, have seen a backtest, and are convinced that this strategy gives you an edge. You don’t understand the rules yet, but you know that, as long as you follow those rules, you should be good. “Price is in the moving average buy zone? Check!”

Ha
Ha is the second level of learning. Ha can be translated as to break free, escape, or wander off, and this stage is where you start to understand the rules and interpret them. Suddenly a lot of things begin to become clearer.

Your trading strategy starts to make sense to you. You understand that a pullback to the moving average buy zone can help you to find “good deals”. And it can help prevent you from paying too much and taking additional risk when entering a trade at overextended price levels.

Ri
Ri is the third and ultimate state of mastery. Here you leave charted territory and become free to follow your own impulses and cut your own trails. You now have enough experience to fully understand the current context and just know what to do – independent of any specific rules.

As a trader you can read, understand and interpret price action. You don’t need any indicators and just “know” when multiple timeframes are in alignment for your setup. You will not have to think about stop loss placement any longer and proper position sizing is second nature to you. You are constantly in the zone.

So, will your journey as a trader be completed once you reach the Ri state? No. Fortunately, there will never be a limit to how good you can become. There will always be something new to learn and ways to optimize your skills even further. The Japanese word kaizen comes to mind, which in a business context refers to continuous change for the better.

Best of luck on your journey to become the best trader you can be. And while the ultimate goal might appear to be distant, shrouded in clouds and almost unreachable, remember that every journey starts with a single step.

Any information, analysis, opinion, commentary or research-based material on this page is for information purposes only and is not, in any circumstances, intended to be an offer of, or solicitation for, a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any person acting on it does so entirely at their own risk and GKFX accepts no responsibility for any adverse trading decisions. You should seek independent advice if you do not understand the associated risks.
 

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