Successful Trading Is Not Just Putting In Screen Time

“Make sure you put in the screen time”.

That is something you hear often when reading information about becoming a successful trader.

It is hard to argue with it taking time to become effective at most things and trading is no different.

What is more important than simply screen time, is the traders capacity for experience.

Can You Understand What You Are Looking At?

Time in front of your screens watching the markets tick by means nothing without taking the time to fully consider what’s really going on. The capacity for experience means:

  • A trader’s ability to observe markets
  • Experience consequences of their own personal actions
  • Consider implications of market events
  • Empirically study market action
  • Hypothesize based on findings
  • Formulate ways to trade behavioral patterns
  • Act based on this experience going forward

That may seem overwhelming for many people out there but really, it isn’t.

There are plenty of successful traders who are hardly PHD candidates, however, what trading does take is a certain mental approach.

A trader’s job really is just about understanding market action, spotting repetitive behavioral patterns and coming up with ways to make money from these patterns whilst controlling risk.

It’s not just about having the best system or even having a big pot of capital to play with (although there’s no doubt that these do help).

A big part of it is being “street smart”  – knowing when to go for it and knowing when to back off.

It’s a combination and flowing together of experience and recognition; understanding the state of the markets and how they are most likely to behave in the current context.

Accepting this allows a trader to compound their day-to-day observations and experiences, which is vital considering that a big part of the investment of learning to trade is indeed time.


Would You Buy At These Highs?

On this chart, the market looks strong and is pushing higher after gaping up on the open and many traders would buy as we looked forward to the US Jobs Report

Screen Time Does NOT Equal Trading Experience - ES before NFP

Why? Although ADP employment is widely regarded as a poor indicator of Non-Farm Payrolls, what always piques the interest of traders is when way it’s out of line with analyst expectations.

You could see that we were looking ahead to the US Jobs Report by the fact that the last few days had dropped off in range/volume and the fact that trading had been consolidating. By consolidating,  I  mean it was not trending – if you look at the ES, it was moving back and forth over prices it had traded in several of the last few sessions.

So even though it looked like the market was strong, what was the likelihood that the biggest players – those who really move the markets, would want to commit their capital when the indices were already on their highs and NFPs were due out the next day?

As it turned out, you wouldn’t have lost money particularly had you persisted with longs and you might even have taken a few ticks.

But the ES certainly did not follow through after looking higher for the first couple of hours of the session.


Hindsight Analysis In Perspective

You know when I commit this to writing it all seems very simple and straight forward. But in real-time, when you live and die by the quality of your assessments and the market’s agreement, it’s not always so simple.

The reason why it’s easier to make correct assessments after all the moves are done, is that you can see the way the market did react at the time, to the conditions that were present.

The information that was most pertinent to market pricing is clearer in hindsight.

In real-time however, we haven’t got the luxury of knowing what the market will be focused on. We can’t easily dismiss all of the factors which obviously didn’t move the market in hindsight, as we might be able to by looking at a historical chart.

In real-time, we must make assessments and adjust all the time. Then we look for evidence that the market as a whole is agreeing with us.


Do Not Think Screen Time Gives You Trading Experience

Experience gives you the added edge of knowing when to trade and when to not trade; when to use one trading system and when to use another. Sitting in front of your trading screens without the correct approach is wasted time.

The days stack up pretty quickly so make sure that you’re using them properly.

Always ask yourself what you’re seeing in terms of market behavior and understand what is happening.

It’s always an interesting project to write out several different scenarios you can see playing out in the markets.  For every reason you can think of trading, think of one that will have you either sitting aside, or taking the opposite position.