Here’s the next installment in the trading plan sequence of posts I have been running as excerpted from my book, The Essentials of Trading. Â
Step 6: Skill Assessment
Trading can be as complicated or as simple as one wants. Some traders use methods which require very little technical proficiency. Others run systems based on advanced math and computer programming. Where a trader falls in this spectrum determines what methods are likely to produce positive results.
Modern trading does increasingly require at least a modicum of technical savvy. In general terms, however, if you can operate a computer sufficiently well to get on the internet, you can trade. Everything else is just a bonus, albeit sometimes a quite handy one. There are numerous software packages available from the ubiquitous Microsoft Excel to specialized data gathering and charting packages to artificial intelligence applications (neural nets, etc.). One can find successful traders who use any level of technology, including those who still do things entirely by hand.
The point is not that one is better than another, or that you need complicated tools with all sorts of bells and whistles, but rather there is something out there for anyone. Each trader just needs to find what is comfortable and useful, and what is not going to eat up the trading funds in costs.
Of course the great thing about skill sets is that they can be expanded. All it takes is a little learning. As an individual gains experience and exposure to trading and the markets, he or she is bound to pick up new knowledge and understanding. It is an evolutionary process.
This completes the basic assessment stage. In the next post we’ll start looking at the process of pulling all of your assessment answers together in a unified trading plan.
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About the Author
John Forman, author of this blog, has traded for more than 20 years, is a professional market analyst, and authored The Essentials of Trading. He is an active participant in trading forums, consults for trading related businesses, as published literally dozens of trading articles, and has been quoted in a number of books and in the media.
** See John’s full bio.
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- Computer Requirements for Traders
The Required Elements for Your Trading Plan
Putting Together Your Personal Trading Plan – Part II
