There's a phase most traders reach when learning to trade and it becomes a struggle to get past it. I call it the Analyst Phase.
This is the stage in your development where you can perform some great analysis. You can break down a chart really well, explain what's been happening, what all the levels are showing you and what may happen next.
Sounds good, doesn't it?
So, what's the problem?
The problem is, that's where the process ends... as a piece of analysis work! People stuck in the Analyst Phase aren't using their analysis to formulate trading ideas and actually execute trades.
In other words, they're a great analyst, but they're just not a trader yet.
If you're stuck in this phase, it's likely you're there because of one or both of the points we'll be discussing. These two tips should help you to start clarifying what you are doing and take the leap from analyst to trader.
1. Know What You're Looking For
Imagine a situation in your life outside of trading (yes, life outside of trading does exist!) where you are looking for something.
Now, think how successful you would be at finding that thing if you actually had no idea what it was you were looking for. You knew it was a thing, but you didn't know what it looked like, what sort of characteristics it had.
Occasionally you might find the thing just by stumbling upon it and realising that it was, in fact, what you were looking for in the first place. However, in most cases you're going to go through a process of searching without finding anything.
That sounds ridiculous, but this is what traders in the Analyst Phase tend to do. They're looking for trading opportunities without knowing exactly what a trading opportunity is for them.
Of course, the markets are dynamic and you're not going to get a completely identical situation for every trade, but there should be certain characteristics or criteria for what a trading opportunity (and ideally, a successful trade) involve.
That should be beyond simply the confirmation points for the entry, but also the overall situation. How long would you expect to be holding a trade for on average (holding period / time horizon)? What sort of outcome is ideal? Is it one move in the market, are you trading the build up of structure?
By understanding what sort of move you are looking for in the market, you'll know what sort of signs you're looking for to show there's an opportunity for that to take place. Now your analysis becomes more meaningful as it will be leading to something specific.
If you are a Premium Member, we have many live stream sessions where we break down how to do this. In particular, the process of building a trading system and analysing the market with the 'end' in mind.
2. Look In The Right Way
OK, so you now know what you're looking for... great! So why are you looking in all the wrong places?
Imagine you're looking for the shower, you wouldn't search in the living room just to be 'more comprehensive' would you? No, direct your search in a way that's efficient and likely to lead to the desired result rather than just confusing matters more.
This is what we need to keep in mind with our trading. There's no point having a clear idea of what a trade looks like for you and then doing irrelevant analysis that won't lead you to finding it.
Remember, your time is a cost and it's valuable, use it wisely.
Think of your analysis as a funnel process. You're going from having all the possible markets at the top of the funnel and you're going through a series of steps (your trading system) that takes you from that mass of markets all the way down to finding the trading opportunity you want and executing it.
By taking this approach, you make every step in your analysis purposeful. This will not only make you more efficient, but will also help you to reduce the element of confusion and 'paralysis by analysis' so you can actually move from being an analyst to being a trader.
It is very common for traders to do a huge amount of analysis and end up confusing themselves or just having a lot of unnecessary work there just for the sake of it, rather than directing their efforts in a way that actually leads to them finding what they're looking for.
Be more precise, be more purposeful in your actions and enjoy the benefits of a more directed trading approach.