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.
I show my technical analysis for trading patterns in Gold, Silver, FCX, and Steel Stocks that are moving! Leslie Jouflas, CMT. View today’s video from ‘Your Daily 5’, from www.stockcharts.com.
This video is a short tutorial on the trading pattern – The Butterfly reversal pattern. Traders can apply this pattern day trading, swing trading, or to longer term analysis. Watch this 5-minute video from Trading Live Online!
SPECIAL INVITATION – Monday, January 10, 2022 1 PM ET.
I’ll be a guest on the panel discussion for TimingResearch’s Crowd Forecast News Show Recorded Live at 1 PM ET.
Markets had an explosive down move with the first week of trading in 2022. I’ll discuss my analysis and the current trade setups in the major Indexes.
Make sure to register even if you can’t join to receive the recording!
CLICK Link TO REGISTER AND RECEIVE THE RECORDING
You are invited to the LIVE recording of the next episode of Crowd Forecast News, this coming Monday. For over 7 years now, the CFN series on TimingResearch has been helping traders start their week out with the best possible edge in the markets.
On this episode, the panel of experts will start out with their forecast for the S&P 500, then move on to talk about the stocks, strategies, economic announcements or anything else important that they expect to happen that traders need to know to start their week off right.
Crowd Forecast News #327
LIVE Recording Date and Time:
– Monday, January 10, 2022
– 1 PM ET (9AM PT)
-Please join me, Leslie Jouflas, CMT of www.TradingLiveOnline.com
Click here to learn more and sign up!
The panel will discuss each of the expert traders’ thoughts on coming market conditions. You’ll gain an edge that is unseen by the general public.
If you can’t attend live, got ahead and register anyway and we’ll send you the archive as soon as the episode is ready…
Best Wishes for Successful Trading!
Excerpted from ‘Trade What You See, How to Profit From Pattern Recognition’Authors Larry Pesavento and Leslie Jouflas
My good friend and trading buddy Jim Twentyman brought the concept of harmonic numbers to my attention. Jim had taken a sabbatical to study the works of WD Gann. He labored more than 12 months into the works of the legendary trader. Jim was very intrigued by the number 54. Intrigued was an understatement! To this day, Jim has never told me the significance of 54 and this is a man who has shared everything with me. I know that it is a metaphysical number but the exact meaning is still unsure with me.
Harmonic numbers are numbers that occur over and over again on a chart. They can be found easily by examining 30-minute charts over a 30-day period. Statistically, you need 100 samples to get one valid harmonic number. After a hundred samples one swing will appear prominent. All the swings on the 30-minute chart will relate to the harmonic number by the ratios we use; .618, .786, 1.00, 1.27, 1.618, 2.00, etc. Once this number is ascertained it can help you in trading several different ways. First, it can act as the first profit objective. Second, it can act as a maximum stop loss on a trade.
Harmonic numbers are one of the more difficult concepts to grasp (much like the opening price principle) but once you see how they can be applied the mystery becomes the trader’s friend.
Markets vibrate up, down, and sideways all the time. They repeat this pattern for all eternity. Think of the market as a giant tuning fork that vibrates constantly. Once a trader discovers this vibration he has an edge over the market, albeit a small one. But it is still an edge just the same! Study the harmonic numbers of your favorite stocks and commodities. It will pay dividends as time goes by!
Here is the primary harmonic number for the S&P 500. This started on the first day of trading, April 16th, 1981 (Elvis’ death). It has remained this all along.
540 x 1.27 = 685
540 x 1.618 = 8.70 (8 pt stop)
540 x 2.00 = 1080
Minimum contraction in S&P 500 is 350. 350 is .618 of 540.
Use these #’s to take profits and use them for maximum stop protection!
Please feel free to visit the website www.tradingliveonline.com for more information on our trading courses.
Contact me directly at firstname.lastname@example.org for information on my one-on-one training to help you with your success!
Best wishes for successful trading!
Leslie Jouflas, CMT