Trading Psychology
Have you heard the term “conscious competent?” If you haven't, don't worry you don't need google, we will tell you. Conscious competent is a psychological term that was created in the late 60’s that reveals the process that an individual goes through when learning a new skill.
There are 4 main stages:
- Unconscious Incompetence (Dumb Money)
- Conscious Incompetence (Semi Dumb Money)
- Conscious Competence (Semi Smart Money)
- Unconscious Competence (Smart Money)
Let's start at the beginning.
Unconscious Incompetence (Dumb Money) - a person who cannot trade successfully if his life depended on it but doesn't know it. Virtually 80% of online investors fit into this category. If the question, “What's your A+ set up,” gives you the cold sweats or raises your heart rate, you are in this category for now.
Conscious Incompetence (Semi Dumb Money) - a person who cannot trade successfully and knows it (takes a bit of balls to admit.) This person knows he should seek education and knowledge before proceeding. If you read Getting Started and made it this far, yet still cannot confidently explain your A+ set up you are probably in this category. Patience young blood, patience.
Conscious Competence (Semi Smart Money) - a person who can trade successfully by formulating and following his plan. Many are confused into thinking they are in this phase when they are a part of a bull market or bubble. Think of all the crypto guru’s on the way up to $19,000 screaming from the rooftops that they would eat their dicks if it didn't go to $100,000. After the 50%+ pull back most have shut the fuck up. These traders still seek to improve their tool belt and improve their trading. (Our goal is to get you to this level by the time you make it into the Alpha Chat.)
Unconscious Competence (Smart Money) - this is the person who can trade successfully and consistently on pure instinct. We often refer to this as trading in the zone, traders who know themselves well, know their weaknesses and exploit them. They understand the psychological influences of their thinking. This is where traders strive to be however only around 1% reach this level of consistency (this stage you will have to get to own your own.)
Be humble and admit mistakes
There tends to be this allure of quitting your day job to be a trader which may be the dumbest fucking thing one could do. Other than the extremely high failure rate of a trader. Depending on just PnL to support a lifestyle is a fool’s errand. Most do not realize that they can easily do more than one thing in a given day. If your job isn’t saving lives 24/7, I’m sorry to burst your bubble, you most certainly can work full time and still invest.
Trust me.
Or you can buy in the parlor trick; quit your job, sit down in front of the screen like the taxi cab drivers and bartenders did during the dot com bubble, and be right back at those same jobs less than a year later. Here is an inside tip, more time in front of your computer does not increase your PnL. As a swing trader, when holding for the big picture move, checking your positions a few times a day is all that's needed. You more than likely spend more time on social media now anyways than you would ever need to to manage a few positions.
Do you have balls?
Try to find a chart that looks like this and post in it in the group chat with the caption ‘Bubble Talk.’