July 2, 2011

Rule of 10,000 Hour For Traders

Rule of 10,000 Hour For Traders

Endure 10,000 hour before you master any skill.

Why 10,000?

It is the average of time needed for anyone to master any skills. Yes, any new skills.
Be it diving, painting, writing or trading.

In the book he dedicated to Daisy, Malcolm Gladwell described clearly about this rule. You can be an expert in any chosen field if you are willing to invested 10,000 hour studying it.

Let's take a simple math,

Assuming you spend 9 hours a day at studying a particular thing, 6 days a week, 52 weeks a year...then it will take about 3.5 years.

I dont think any retail trader sits down for 9 hours a day and actively studies trading. Instead, they attempt to fit it in whenever they can trying to accomodate work, family and friends. 

At that rate, it would take probably 10+ years.

Trading is exactly the same way. It will take active studying and devotion for 10,000 hour to master a trade.
Similar to others, the first thousand hour would be the most painful experience. Be prepared for losing trades, or even losing an account.

However, the way you spend that 10,000 hour is crucial.
If you spend your precious time on the wrong path, you will not ended a successful trader.

Therefore, you should plan how would you spend it wisely. Some of the most important thing you need to develop in 10,000 time span:

Personal Development

Mindset has always come before any endeavor in the trading fields. Fix your mindset if the reason you are trading are listed below:

  • easy money
  • no hard work
  • want to impress other
  • a broker offering (bonus, rebate, etc)
  • work at home, stay at home no boss to tell you what to do. What an easy life.
The advertising of a brokerage firm is telling you that trading is easy? It was meant to be that way! It is part of their strategy to take your money.

Trading can be simple, but never easy.

Money Management

After you master your mindset, you need to build your money management outlook. How much money you are willing to loose, really?

Every trader, especially successful one endure many losses before they become what they are now. Now, here is a hint why they are able to be successful while other don't. They can afford the losses.

They are planning way ahead, before any loss occur. It is no surprise for them when they need to cut their losses.

"What? Planning for a loss? Are you out of your mind! We are here to be a successful trader, aren't we?"

Just remember, losing is as easy as winning in trading.

Trading Strategy

Spend your time wisely. It will not help you much if you jumping from one method to another before you mastered it. 

Chose your market, analyze it. Develop a solid trading plan. Do it over and over.
Analyze the outcome. 

What is the weakness and strength of your method? 

Can it be done successfully in every market? 
Even so, you only need to focus on one or two markets to be a successful trader.

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About ArrowFX

Technically analyze the forex market mainly on USDJPY, EURUSD and GBPUSD by using market rhythm method started by Philip Nel on Forex Factory. The thread started on 2007 and still alive.
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