Tradings a marathon not a sprint and requires serious training, consistent studying, and observing other traders. One must also have a mentor, sound nutrition, physical and mental fitness, and sleep. Just like a marathon or Ironman triathlon contestant must be well-prepared and pace themselves to win the race, traders must do the same to win the trading game. Without proper knowledge, training, preparation, and skills, one cannot win in trading. In this article, we will discuss the importance of pacing oneself in trading to win the long-term trading race.
The fable of the tortoise and the hare…
This is a good example that highlights the importance of pacing oneself in trading. The hare got over-confident, arrogant, and lazy, and he was thinking and acting emotionally rather than logically. On the other hand, the tortoise was slow, consistent, and methodical. He wasn’t in a rush, wasn’t burning all his fuel right away, and wasn’t emotional or arrogant. The tortoise eventually won the proverbial race. This story is as applicable to trading as it is to anything else. In a trading “race,” the slowest guy tends to win.
If you start off going too fast as most traders do, trying to make a lot of money fast by trading constantly and risking a lot per trade, you will eventually lose and get passed by the guy taking his time and doing things right. To be a successful trader over the long-term, you have to go slow and be consistent. If you start trading too much and risking too much, you will burn all your money and be out of the race quicker than the hare. You should be able to turn your charts off after entering a trade, walk away until tomorrow, and be totally fine with whatever the outcome. You should be like the tortoise, not the hare.
It is essential to focus on your end-of-year trading results. Most traders get lost in the trees and can no longer see the “forest” (the bigger picture). One trade should not matter, so make sure you do not make any one trade matter by risking too much money or feeling desperate to win. Traders get into trouble by making every trade too important. This is not how you pace yourself. Remember, it is your results over a large sample size of trades that matter.
You pace yourself to win the long-distance trading race by learning, identifying your edge, sticking to the edge (not over-trading), waiting for your edge, preserving risk capital, having a plan, and following it. Becoming an expert in trading, or anything, requires committing considerable time and energy. Consistent long-term study is a critical component to becoming an expert in any professional field, including trading.
The “10,000 hours concept”
It’s commonly known to say that it takes 10,000 hours of practice to become an expert at anything. Although the exact number of hours to become an expert on something varies from person to person, depending on multiple variables that differ from one person to the next, consistent long-term study is necessary to become an expert in any professional field.
To become an expert trader, you have to decide early-on if you are in trading for the long haul. People who commit to something long-term have a much better chance of succeeding at it than those who are just experimenting or unsure. In trading, if you spend months learning all the minute details of all the different technical analysis indicators, you are wasting your time, and you are missing out on learning about what actually matters. Learn to read, interpret, and understand the price action.
One must learn to read and analyze the market’s price action. Price action trading is a technical analysis approach that requires the trader to analyze and make decisions based on the price of the asset being traded!