Home > management, Markets, trading > Profitable ETF Trading Strategies: developing a master belief list

Profitable ETF Trading Strategies: developing a master belief list


Developing a master belief list is an important part of assembling your total trading plan.  This is a list that itemizes every belief that you can think of with respect to self, market and systems. In later stages of analysis and self awareness, you will come back to each belief to identify the source and the evidence for belief in each of these. At the end of this period of analysis you will have a thorough understanding of yourself and the trading world around you. 

You will probably begin this process with divergent thinking, by which I mean you generate as broad a set of beliefs as you can come up with. This list should come from trusted others, personal experience, excellent books and recommendations from people who disagree with you. It’s important to include divergent thinking in the formative stages so that you don’t lock yourself into preconceived notions at an early stage. 

After the divergent thinking is over, you can proceed to convergent thinking, where you will begin to integrate the various separate beliefs into an integrated network of coordinated beliefs. After the initial brainstorm, you proceed to test each belief carefully before deciding if it makes the final cut to enter your formal belief structure. 

I discovered after doing this drill, that I had many beliefs that were contradictory, whose evidence was not convincing upon closer inspection, and whose source was basically unknown. I have discovered that as I have eliminated unnecessary beliefs that I improved my clarity and my willingness to act on less and less information. This in turn gives me an advantage of speed of execution since I need less information to trigger effective action. 

Once you have conducted the first formal cycle of belief inventory, it would be natural for this network of beliefs to support your trading for at least 3 to 5 years as you begin to add practical experience and reflection to this initial undertaking. It has been my experience that after 3 to 5 years though, you need to refresh this exercise in order to see what has changed as a consequence of professional actions and mature reflections. In between these large formal reviews a process of monthly, quarterly and annual reviews should be sufficient to maintain your awareness. 

By maintaining a trader’s belief journal, you’ll have a working document to support you in this ongoing process of self-awareness and deep reflection.

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