Over the last several years, I’ve coached thousands of traders.<\/p>\n
And one thing my most successful students all have in common is how they pick up new skills.<\/p>\n
Whenever we learn, we take either an open- or closed-loop approach.<\/p>\n
Open loop systems provide instant feedback as to whether an action was successful or not.<\/p>\n
For example, if you throw a dart at a board, you’ll likely take an open-loop approach. If the dart hits your target, you’ll receive positive feedback from the action you just performed. If it misses, it brings negative feedback.<\/p>\n
On the other hand, a closed loop provides continuous feedback throughout the process.<\/p>\n
For example, a Formula 1 driver receives constant feedback over the course of a race. They must make continuous adjustments as they drive through the circuit.<\/p>\n
Making adjustments along the way is neither bad nor good… it\u2019s just part of the race.<\/p>\n
Closed loop systems are much more demanding both physically and mentally. They require a steady stream of focus and effort to maintain a high standard of performance.<\/p>\n
From my experience, I’ve seen most traders take an open-loop approach to their trades. They assume a trade is “good” if it makes money, and “bad” if it loses money.<\/p>\n
But the problem with this approach is that it ignores trading is a game of probabilities that comes down to the quality of your plan.<\/p>\n
The hard truth is that even the best trading setups fail. <\/strong>You can do everything right in terms of picking your next trade and still end up losing money.<\/p>\n Just because a trade was a winner doesn’t make it good. And vice versa for a losing trade. What matters is how many net winners you will end up with out of 100 similar trades.<\/p>\n Successful traders understand this concept and accept that they have control over everything except<\/em> what the market will do next.<\/p>\n <\/p>\n Free Trading Resources<\/strong><\/p>\n Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career \u2013 at zero cost to you. Just click here<\/a> to check it out.<\/p>\n<\/p><\/div>\n<\/div>\n <\/p>\n There are as many ways to trade the market as there are traders.<\/p>\n But if you know how to apply a closed-loop approach to your trading – and stay consistent in your trading plan – you’ll be far ahead of the crowd. That’s because closed loop systems focus on process, not results.<\/p>\n Unfortunately, most traders avoid taking a closed-loop approach because they don’t have a process to follow in the first place.<\/p>\n So next Monday, I’m going to give you a foundation on which you can build your own process. Stay tuned for more.<\/p>\n Happy trading,<\/p>\n