As we discussed in this video the various levels of competencies in trading and the importance of adapting to the changing market while developing second-order competency in trading.
The market structure is constantly shifting throughout the different trading sessions, close to the holiday seasons, at the time of major economic releases, and following geopolitical news events.
Dr. Kahneman’s studies have revealed that traders develop profitable trading systems with their slower analytical reasoning minds but execute them using their faster pattern recognition minds.
When the market structural components such as pattern, volume, volatility, and momentum are stable, there is no problem trading the market and executing trading plans properly.
The issue arises when the market structure and pace change over time, but the parameters used to develop the trading system and trader’s mindset remain constant.
Most traders have developed a skill for identifying market structures in the past under fixed conditions and a set of rules.
This static analysis and interpretation of the market is referred to by Dr. Brett Steenbarger as “First-order Competency,” which is necessary but not sufficient for long-term consistency and survival in an evolving market.
For example, a competent trader with the skill of trading a high volatility bull market may do well for a while under these fixed conditions. However, once market volatility drops during range-bound corrections or reverses and enters a bear market, the trader cannot achieve the same enhanced focused state of analysis and stay in flow with the new market structure to trade it successfully.
The first-order competent trader will be vulnerable to objective self-awareness effects and cognitive interference whenever conditions change. Also, traders who become calibrated to fixed market structures are often left behind and miss opportunities, which will lead to the “Fear of Missing Out” and its subsequent performance-related stress and impulsive responses.
The first-order competent trader will be vulnerable to objective self-awareness effects and cognitive interference whenever conditions change. Also, traders who become calibrated to fixed market structures are often left behind and miss opportunities, which will lead to the “Fear of Missing Out” and its subsequent performance-related stress and impulsive responses.
On the other hand, professional traders have developed the skill of adapting to changing market structure, which is referred to by Dr. Brett Steenbarger as “Second-order Competency.” These traders recognize and adapt to the evolving situations and stay in flow with the new market structure. So, they do not experience an overwhelming threat, feel frustrated, get distracted, or respond impulsively to the new situation.
In trading as a high-performance career, all aspiring traders aiming for success must develop a second-order competency and seek skill-focused training under deliberate practice training, such as the one offered in the Price Action Algo Trading course.
To understand more about the process of achieving expert-level competency and mastering execution of a profitable price action trading system with a high win rate, please watch the next few videos.
Master Consistency: Build Your Personalized Trading Strategy (Beat Signals, Patterns, Setups) https://www.youtube.com/watch?v=b6kVakvsl2k&list=PLNdkLl_SbhT0q9xpFhLkKbjQ0LiowjCYD&index=3 This blog post dives into the world of trading terminology, clearing up confusion
Master Prop Trading: The Successful Prop Trader’s Insider Secrets For Consistent Profits and Payouts Master Prop Trading: The Successful Prop Trader's Insider Secrets For Consistent
The Three Essential Trendline Trading Strategies that You Need to Consistently Trade Any Market https://www.youtube.com/watch?v=t9kbHfS_Aao&t=155s In this video I’m going to go through the three
Human-Market Psychology Conflicts and Cognitive Emotional Mismatches – Loss Aversion https://www.youtube.com/watch?v=i_n6cbyyfJ4&list=PLNdkLl_SbhT0q9xpFhLkKbjQ0LiowjCYD We continue our discussion on the topic of Human-Market Psychology Conflicts and address the
Trading Signals vs. Patterns vs. Setups vs. Strategies: Why a Personalized, Profitable Trading Strategy Is All You Need for Consistency https://youtu.be/b6kVakvsl2k We’re going to break
Introduction to Trading Personalization: Understanding its Crucial Role in a Trader’s Success https://youtu.be/c1-0XvoJeLc This lesson of module 12, workshop 34, I will discuss the topic
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