Thursday Trader's Tip: The 2 Technical Skills for Trading Success
Thursday Trader's Tip editions offer quick trading psychology advice that can be digested in 5 minutes.
In this week’s videos, we’ll talk about the two technical skills for trading success.
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Written Version:
Trading success requires a deep understanding of your edge, which in turn requires two skills:
1. Knowing the favorable conditions to your edge;
2. Knowing the unfavorable conditions to trade your edge.
Favorable Conditions:
If you’re past the strategy-building phase, you know that certain conditions especially favor your edge.
We’re talking about market conditions but also your A+ setups. You’ve categorized them as A+ setups because they stand out, they give you better odds to win, and when they show up, there’s normally more confidence.
The thing is, you’ll only get better at understanding these conditions with experience and repetition. In the beginning, you won’t be able to distinguish between A and B setups.
These favorable conditions allow you to do one thing: press harder.
When you have clear statistics that tell you your A setups perform better than the remaining ones, you feel more comfortable playing bigger and managing that size from entry till take profit.
This means maximizing your edge and its full potential.
Unfavorable Conditions:
You might be very good at making money when the conditions are there, but if you can't sit on the sidelines when it's not your time, you'll eventually give the money back to the market.
I use to say that your trading quality is as good as your ability to sit on the sidelines when it’s not your time.
Overfocusing on the favorable conditions to your edge is very frequent, especially for traders who want to be in the market at all times, swayed by the urge to act and impulsivity.
If you've ever been there, you know how it feels: You’re capable of having a great trading week, but the sustainability is not there yet, and you end up losing the money you made.
Knowing the market conditions and scenarios that don’t favor your edge allows you capital and mental preservation!
If you can have better results with less work, don’t insist on trading your strategy in unfavorable scenarios or conditions that are new to you.
Choose to isolate various scenarios like the one you saw, and when you have a good sample, study them to see if it’s worth trading them.
Trading is a blend of aggressiveness and caution. Most traders don’t know when to utilize both skills—they are aggressive when they should be cautious and hesitate when they should pull the trigger fast.
The more data you collect about your edge, the deeper your understanding, and then, you can use aggression and caution at the right moments to your best favor!
Peaceful trading,
Sara
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