Lately, I have been spending my time working on my ATS (automated trading system), developing strategies and risk management models. I visited few forums, reading some brilliant ideas, and of course, unavoidable, some junks.

While reading the postings by some new/struggling traders, I have some thoughts.

What do you really need to learn about trading?

Technical analysis? Fundamental analysis? Risk management? trading psychology? Well, yes, yes, yes, I hear you. These are important. Very important. But, the essential skill one should really learn is the skill of learning. Learning the market condition.

Market is constantly changing. Or should I say market behaviour is consistently inconsistent. Your holy grail setup that works today might, or most likely, will fail later. Getting back to text books, forums trying to find new setups is just not the most effective route.

Learning to adjust your mindset, to accept the change, to really understand your battle field, with these, start to enhance or alter your strategies. This is when your skills (technical analysis,fundamental analysis etc) come into picture. But bear in mind the fact: Technical analysis is a lagging tool, as it is based on what happened in the past, and forecast what is likely to happen in the future. Fundamental analysis is a product of idealism. Ideally, market should move according to its fundamentals. But, more often than not, the reality negates this. During bull markets, high will get higher, regardless of how much the stock really worth. During bear market like now, cheap can always get cheaper.

If you were to live trading the market, start developing a sense of market. Developing the ability to Know where you are, what you are facing, are far more valuable than watching MACD uptick and go Long(go wrong)…

Just another piece of rant from Trader Gav.

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Update (16-02-2012)

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