What if I told you that there are only a few differences between trading and cooking and that, in their essence, trading is just like cooking? Both professions demand certain skills, and some of them are extremely similar.
Just like in trading, different chefs have different styles of cooking. When you take a look at the chefs, you realise that there is almost no great chef that is an all-rounder.
For example, a highly-skilled sushi chef will hardly be great at cooking BBQ food. Or an Italian chef cooking French food. Yes, they might be better than us in any possible dish, but their skill won’t be the best in the world in more than one speciality.
It takes a loads of time to be excellent in something. Do you think people have this kind of time?
Chefs can’t be the best at styles they aren’t focused on. This happens because they don’t train in it, don’t have the depth of experience in it, haven’t practised it. Their time is spent on what really matters for them.
Trading isn’t different – scalpers rarely excel in swing traders. Just like position traders struggle to scalp.
Stick to your strategy and what you’re more skilled at and don’t jump around and dabble you are more likely to fail.
For both trading and cooking we need the right tools. While chefs need a good set of pans and skillets, high-quality knives, spoons, a stove, and things like that, traders need tools such as a good home broker, charts, all the analysis tools, etc.
Some tools are optional both in cooking and in trading, but they usually make a difference when used. That is the case of demo trading at the beginning of your trading career.
Demo trading is for those who want to practice without losing money – it is the same for people who are training to be chefs, who bake and cook things just for the sake of learning.
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They are not going to sell the food they prepared while “demo cooking”. They are only practising.
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A baker can’t bake without the ingredients required by the recipe, right? If they are specialist in baking cakes, they will need tons of sugar, flour, butter, and things like that.
Nothing appears out of thin air. There is no creation, only transformation.
That is the same for traders. Trading usually requires one main ingredient: money.
Related reading: How Much Money Do you Need To Start Trading
But we don’t only need money. There are also intangible ingredients, those we can’t see. Just like the chef uses her expertise learned from years of baking cakes, the trader will also use her knowledge, strategies, and experience as an ingredient in the whole trading process.
Each food has a recipe, and every chef has the recipes of their dishes on their minds.
Trading is all about a good recipe repeated over and over again until the conditions change. That is what we call trading strategies.
For a long time, a chef’s recipe was on the paper. They had to practise a lot by checking the written version before acknowledging it and making it naturally come out while cooking.
When trading, we can use a trading journal to help us remember our recipes and change them when needed. Trading journals are so important that I recommend them even to the most experienced traders.
In this article, we’ve discussed trading journals and what they do. Some of the things were:
- Help us develop more discipline with their instant-feedback tools
- Optimise trade management for better decisions in our trades.
- Increase the size of the “winners”, which are the profits, by tweaking trade exiting
- Evaluate and improve trade exits for a higher win rate
Trading journals are a recipe for success!
Now you get why trading is just like cooking, right?
If you’re a good cook, that’s amazing. If you’re not, you still can be a good trader. After all, although they are very similar in many aspects, in the end, they are different things.
With time, your trading strategy will come naturally, and you’ll feel so comfortable trading that you’ll develop instincts and more in-depth perception of the market.
Get really good by specialising in one type of trading. This is the quickest path to successful trading and profits.
Yes, you can investigate other possibilities. I’m not saying it’s a sin to try different types of trading, especially in the beginning. But once you’ve found your home, make sure to focus. That is essential to reach a high level of success and become the best in what you’re doing!