| Proper Preparation |
| By Price Headley |
Published
02/14/2005
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Stocks
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Unrated
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Proper Preparation
Ever wonder how some athletes get to be "great", while others with much talent remain only "good"? While some talent is in-born, I believe the great ones cultivate a work ethic that is superior to those in the "good" camp. As the saying goes, "the harder I work, the luckier I get." Think about your preparation process as a chance to open you up to new opportunities. Do you prepare by rolling into the office soon before the market opens and glancing through the headlines to see which hot stock you're going to trade today? If so, I submit your preparation process is lacking, and as a result you are becoming too reactive as a trader. Instead, do your preparation after the markets close the prior day, which allows you to get out of the heat of the moment and develop a plan to trade stocks based on your indicator setups. Then you can look for confirmation the following day as necessary. This allows you to be in a more proactive mindset, which makes you feel more in control of your trading destiny. Self-confidence is directly correlated with the trader's perception of his level of preparation coming into the trading day, which leads to his ability to perform successfully. Good preparation also influences the skill level that a trader believes he possesses. You need defined time to prepare for the next trading day to build up your trading "feel" and confidence. After the close, I run my computer systems for new entries and exits, open positions first, then look at my plan and trading rules. The next morning I like to get in earlier than most, when things are quiet and peaceful. I find this leads to a more serene and calm effect on my trading for the rest of the day, versus getting in late and feeling like I am rushing. It's like the common metaphor of believing in abundance versus believing in scarcity. By getting in earlier without the rush into work, I pre-program to execute trade with visualization techniques, do my self-analysis described above to make sure I am ready to trade, then I take action. After the close I then review that day's trades, asking "did I follow my rules?" Then I run my computer systems and the cycle begins again. One of the keys as a trader is that you must spend the time necessary to make trading skills "automatic" and create winning trading habits. If wishing to be immersed in total focus, you cannot be thinking about technique or strategy. As a beginning golfer I used to think a variety of swing thoughts "Keep your head down", "Left arm straight", etc. and then hit a rigid, weak shot because so much thinking was occurring that I could not unleash my fluid swing's true inner power. Preparation and practice make for proper skill development. By making these actions automatic, the mind can be more purely focused on trading actions necessary to generate profits or reduce losses. One final thought. Let's say the average trader prepares for an hour each day. If you prepared for an extra 30 minutes each day (90 minutes per day total), in a week you would have prepared an extra 2-1/2 hours, in a month 10.5 hours extra and in a year 126 hours or an extra 19 trading days worth of preparation. This extra focus on your trading goal will create new opportunities for you that you never before seemed to find in a timely way. Extra practice and preparation can give you a serious edge if you are willing to commit the time. Most aren't willing to do this, and that is what separates the great ones in their commitment to superior performance. Price Headley is the founder and chief analyst of BigTrends.com, which provides daily stock and options recommendations and education.
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