Paying attention to what's really important and avoiding anything else in trading is what seperates low skill, middle skill and high skill traders

Let me expand on that...

First off let's look at each cohort and identify characteristics of each

Low Skill: Lucky and Long, likely your father in law or a friend who just downloaded RobinHood and is long everything. Has little idea what they are doing but still killing it

Middle Skill Trader: Knows how to short, talks about it a lot, bearish because the 25 newsletters they subscribe to are bearish. Can quote Market Wizards. Constantly on the search for the best indicator or group of indicators. Has some great trades then loses it all on 1 trade

High Skill Trader: Has narrowed their trading to specialize in a niche that can be repeated over and over, understands edges like position sizing, regimes, price action, doesn't get caught up in headlines, has routines, knows the statistical edge they are leveraging

The two most profitable groups are the Low Skill and High Skill traders

The Middle Skilled traders are having the toughest time of this trading game. They are constantly searching for the one thing that will instantly improve their trading and put in long hard hours of research

The Middle Skilled traders are reliant on indicators, believing if they could just find the perfect mix of indicators, the holy grail indicator, they would finally be consistent

After a handful of wins they feel like they finally got trading figured out, and ramp up their size

Only to watch the trade go against them, yet they don't stop out like they should

Thinking that they finally figured out the holy grail, so when the holy grail signaled the trade then they shouldn't stop out, the trade just needs to breath a bit

Afterall, how many times have they stopped out right when the trade turns back in their direction and goes on to victory while the Middle Skill Trader realizes a loss

Frustrated, the phrase that every Middle Skill Trader says

"I just want to be consistent"

What they are really saying is "I don't want to be wrong"

That is the key to moving from Middle Skill Trader to High Skill Trader

When they realize it isn't about being wrong

Becoming a High Skill Trader is about being Consistently Profitable

Being wrong is part of consistently profitable trading

Having a system that is manually backtested so the trader knows the ins and outs of the system

Having the model knowing win rate, expectancy, std-dev, SQN, profit factor, risk of ruin, avg win, avg loss

Knowing how many trades per day, week, month, year to expect

Knowing when the trader is trader better than the model, worse than the model or at par with that model

The High Skill Trader has a predictable business model and can back in to how much capital they need to trade in order to hit their monthly revenue targets

If win rate is 70%
Avg win = 1.2r
Avg loss = 1r
Total trades = 100

You can figure out how much capital you need to start

This is just a quick example, but more detailed work would show that after each trade 2% risk changes from $1,000 as the account grows

Back to the power of position sizing https://www.pollinatetrading.com/blog/Why-Does-SIze-Matter

Knowing what the right sort of work that needs to be done is one of the biggest challenges if you are a Middle Skill Trader wanting to become a High Skill Trader

Here's a post I wrote about it https://www.pollinatetrading.com/blog/Hard-work-to-become-good

If you are struggling as a middle skill trader reach out