Self-Management in Trading - and Why it is so Important!
Initiative, organization, and accountability are incredibly significant when It comes to self-management and in that there are 5 key skill sets that I use to tie it all together. If you see yourself as a person who is accountable, it means that you can take responsibility, you can take control and work hard to maximize your potential.
Let us look at the 5 skills and break them down step by step:
- Reinforcement (Creating Habits).
- Self-Motivation and Commitment.
- Time and Effort Management.
The reason I have expectation above performance is because expectation dictates performance. Setting short term, medium term and long-term goals are key to becoming a successful trader. While each of us might have different goals we all share the same basic principle which is to become a consistently profitable trader.
Without expectation how can we perform? That takes us to the next step.
Now that we have set ourselves goals and expectations, we can focus on performance. I can write a whole essay on this topic but important notes on performance is not just how much money I am making but measuring performance by looking at things like: Winning trades vs Losing Trades, the average win size against the average loss size, timeframes and time spent in trades (win or lose) and the list goes on. Performance really is the key to successful trading and being more aware of your own performance you will know how to improve it.
Reinforcement, or creating habits, is especially important even if it may seem tedious at times. Creating a trading routine helps with time management, keeps you focused and creating a habit of reviewing your daily and past performance helps us to know where we are on the journey to success and how well we are progressing toward our goals and expectations.
Self-Motivation and Commitment:
This is a tough one even though it seems pretty simple. No one can motivate us. Yes, we can find motivation from others, by reading books or watching motivational speakers, but only we can motivate ourselves by taking action. This ties in with expectations again, because if we have a clear set of goals, and we are committed to achieving those goals, that alone will give us the motivation to get up, do the work and achieve the result we aim for. Self-confidence also plays a big part in this step and it is important to note that some people are naturally self-confident while others need to develop this by creating good habits and being disciplined. A lack of confidence can result in fear in the market as well so make sure you do your backtests and trade small until your confidence increases.
Time and Effort Management:
This is the final step in my set of skills for self-management, but it is as important as the rest if not more so. It is the glue that holds my trading system in place. Both time and effort management is equally important because it allows us to enhance our performance and achieve our desired goals if we manage them correctly. It brings us back to good healthy habits, like routines, problem-solving, resisting stress, communicating clearly, managing time, strengthening memory, and exercising regularly.