Learn how personal knowledge management can boost trading strategy
Do you have all the right tools and techniques to manage trading information? Commonly applied for business systems and organizations, knowledge management can also be beneficial in a forex trading career. Strategic and structured, personal knowledge management enhances comprehensive skills and proper utilization of all data acquired. It is about gathering correct knowledge and ensuring access to information that is useful during decision making. For a more methodical use of trading information, apply knowledge management for successful trading.
What is knowledge management?
“Knowledge management is the systematic management of an organization's knowledge assets for the purpose of creating value and meeting tactical & strategic requirements; it consists of the initiatives, processes, strategies, and systems that sustain and enhance the storage, assessment, sharing, refinement, and creation of knowledge.” - Knowledge Management Tools
The activities of knowledge management:
- Proper use of processes that document and circulate information needed
- Application of methods that will help identify, structure and retrieve all relevant data
- The strategic approach to analyzing and applying incoming information
- The management of data that will enhance performance and competitiveness
- A business practice that encourages a more learning and analytical mindset
- Control and use of valuable information to reach target goals
Things you need to know about knowledge managementForex traders have access to a large amount of information. Within a day, traders are exposed to incoming data from charts, news or signals. To optimize decision making and trading performance, effective data management improves planning, output and performance. Even though this is a practice most used by businesses, forex traders can benefit from learning about personal knowledge management. By taking advantage of data and intellectual capacity, you can enhance the use of trading concepts and analysis. This will help you narrow down on important information and minimize the possibility of information overload.Learn how to apply knowledge management from an organizational process to a forex trading strategy. Here are the top things you need to know about knowledge management:
You must set the purpose of knowledge managementThere are many ways proper managing of data can help a forex trader. Before spending time and resources for knowledge management, set out why you would like to apply this to your trading plan. Get a clear idea of what the goals are and why it is helpful for your strategy. Do you feel that the organization of your trading data could still be improved? Do you place great importance on trading concepts and information for your forex strategy? Since forex traders are the decision makers of their trades, it is vital to figure out the purpose of knowledge management and how it can improve trades.
Knowledge management is a growing practice in today’s worldKnowledge management is a process where traders can better understand data and observations. Due to easy access from smartphones or computers, forex traders are immediately exposed to plenty of information. Whether this is from emails, social media or trading platforms, the fast exchange of data can become overwhelming. According to Tech 21 Century, the human brain is exposed to a volume of 34 gigabytes of information daily. Because of this, more people placing importance on being able to declutter and manage data for better mental health and performance.Information is vital when forming a trading strategy and performing executions. Being an essential part of decision making, acquired knowledge for trades is a valuable tool for success. When applied to trading, knowledge management can provide a more structured way of using data.
Personal knowledge management differs from every traderKnowledge management involves applying a unique set of methods aimed to make sense out of incoming information. Much like a trading strategy, every trader would need to set up an individual system where meaningful data is available when necessary. Because of this, it is important to learn the different tools and systems available to manage trading information to complement your strategy. Whether you use forex calendars or signal softwares, make sure you perform test your approach through a demo account and see what works best.
Management of data for better interpretationAccording to Harold Jarche on Science Direct, personal knowledge management in can be achieved in a workplace through the Seek Sense Share framework. It describes the use of social networks to filter, make sense and confirm the information. This research is another helpful method traders can apply to better interpret incoming data. It allows you to not only take in forex education or analysis but also transform information to ingrained knowledge. Practicing this can boost comprehensive skills and enhance the way trading information is interpreted for better output. By efficiently practicing this framework, traders can easily apply knowledge management to improve systems.
- Seek is the gathering of data from trusted resources. This means finding useful data concentrated on the area of knowledge you need. For example, if your focus is on fundamental analysis, make sure to filter the news you receive.
- Sense is how gathered information can be used to achieve the target goal. It involves practicing or experimenting. Through a demo account, traders can make use of this step along with the relevant data from the Seek method.
- Share is the exchange of ideas and experiences. Oftentimes, the interaction between traders can lead to ideas that can optimize systems. Be open to getting information from sharing your knowledge.
Knowledge management helps you see what you need and do not needIs your current access to financial news beneficial to your strategy? Are your current trading tools relevant to your focus? Does this software allow you to make better decisions? Are you subscribing to the right market analysis site? Knowledge in forex trading is an asset that will help you reach trading goals. In an active market, it is important to review all the information coming your way. For long term success, this will allow you to manage which information is advantageous to your strategy.By reviewing your sources of information, all efforts of read and understanding data is beneficial to your trades. Be sure to take note and examine this with the use of an effective forex trading journal. In the end, you can analyze which knowledge management practices and tools are positively affecting your output.
Workflow and productivity improves after implementation of knowledge managementWhen applied in an organization, a systematic approach to access of information can greatly improve overall workflow and productivity. Based on Axton Liu’s finds on Medium.com, efficient knowledge management is achieved through these three phases:
- Collection of information that turns into embedded knowledge
- Organization to classify and systematize the data
- Output from collected data which can determine the success of knowledge management.