This is part one of two articles on ‘soft’ skills. These skills provide a missing piece to your trading proficiency and can take your trading performance to the next level.
Have you ever . . .
. . . started solving a problem only to discover you were working on a symptom of the problem—and not the root of the problem?
. . . made a wrong decision and later discovered that it was because you ignored an important piece of information you knew about before you made the decision?
. . . invested time, energy, and money in learning something that wasn’t really essen-tial to your primary objective?
If not, congratulations! But if you have, you’re certainly not alone because most of us have done these things more than once.
The good news is we learn from those experiences and gain insight into the importance of our soft skills—‘step-children’ skills we pay less attention to than the ‘hard’ skills of trading.
When I ask traders how much time they invest to increase their proficiency using soft skills, I typically get one of two responses.
“What’s a soft skill?” or “Probably not enough.”
Now, before I go any further, let’s look at three definitions:
Skill: Merriam-Webster says a skill is, “the ability to use one’s knowledge effectively and readily in execution or performance or a learned power of doing something competently.”
Hard skills: According to Investopedia, they are specific, teachable abilities that can be defined and measured, such as typing, writing, math, reading and the ability to use software programs.
Soft skills: Since there a several different definitions for soft skills, here are a few applicable to trading: Growth minded, strong work ethic, self-awareness, patience, time management, problem-solving, perceptiveness, emotion management, decisiveness, work under pressure, and flexibility.
For example, here are some common hard-trading skills and the soft skills that impact their performance.
Why are soft skills important? Well, based on our experience with traders, as both subscribers and clients, I firmly believe most trading errors are not due to technical trading skills but rather to the application, or lack of application, of the trader’s soft skills.
An overview of skills
I believe one’s achievement of uncommon success in trading rests upon the proficient application of three types of skills:
• Hard skills: Market knowledge, strategies, and tactics
• Soft skills: Self-awareness, knowledge, and understanding
• Synthesis skills: The integration of hard and soft skills
As traders, we are continually exposed to new ideas, systems, methodologies, indicators, charting styles, and tactics. Attempting to master many skills all at once can be extremely frustrating, and can also be a waste of time. Too many traders spend their time hopping from system to system instead of mastering the fundamentals.
I’m not suggesting that you shun everything that comes onto the marketplace. However, let’s consider this quote by author, Nora Roberts, “Every writer has to figure out what works best and has to select and discard different skills before they find the one that fits.” Replace ‘writer’ with trader, and you have an exact summation of the situation.
In the past, an apprentice graduated to journeyman, and a journeyman graduated to master. As a master, he or she was repeatedly required to demonstrate the proficiency of their skill set. Though, in many cases, this is the conceptual path traders take in developing their hard-trading skills, they can lack in a curriculum, or plan, when it comes to developing the fundamentals of soft skills.
As I mentioned, based on decades of experience, I believe soft skills deserve more scrutiny because they have the potential to make you a better trader all-around. Here are twenty soft trading skills that I believe are essential for any trader striving to become successful.
Enhancing Your Core Trading Skills
All skills have a shelf life. Some wear out, and some you grow out of. Consequently, it’s a good idea to periodically review your trading skill set by asking the following questions:
• Should you acquire a new skill? If so, which one(s)?
• Should you add something to, or expand your existing skill proficiency?
• Should you re-prioritize your existing skill set?
• Should you reduce or minimize the use of an existing skill?
In other words: more, less, start, or stop?
A general sequence you can apply to evaluate each skill is: understand the skill, determine why it’s important, look to see how you could learn more, and develop any ideas for gaining proficiency.
Look for the next article o this same topic; I will focus on several soft skills with examples of how you can develop your own Skills Database. My goal is that, over time, you will gain a valuable, personal resource.
Until next time…