The core idea behind what I want to teach you is process. A lot of people talk about having a process but building one and trusting it can be very difficult. While I don’t hold the keys to any great mysteries, I have built my own process and in doing so, found some key items that were massively helpful. What I aim to do in the series below is simply guide you through the process of building your process.
Your process will end up being your own. It has to be unique and fit to you, however I believe all processes have the same shared core items.
The Benefits of a Process
While there are many things that are made easier with a good process, I want to focus our attention to one quality of process that I think is the real gift it gives.
Stability.
Markets are dynamic, humans are dynamic, if you trade along with a job or family, those elements of your life will also be dynamic. What a good process does is simply create stability while you work through the issues that arise while working out your daily life.
The Two Phases
There are two main places we want to create this stability through process.
1. The Market
Strategy Development and The Feedback Loop will be the focus of this portion of the process and we will work together to come up with some simple, clear solutions for both of these. They do not need to be fancy, but they do need to be clear.
2. The Trader
Your Team and Your Identity are the focus of this portion of the process. What we aim do to here is understand ourselves. What I’ve found is that markets are one set of data and we are another. Often, when the two overlay, they produce poor results. We need to have a clear sense of ourselves and our intentions as we overlay that data onto the market’s data. If the two are clear, we may still lose but it will be far less painful. More often, and over time, this clear overlay should produce positive results. The aim however is clarity.
Strategy Development:
The key to a good strategy is not how great it is all the time but how well you can trade it. You’ll need to set the base for what this might look like and I can help you refine it. I try not to add anything that isn’t needed and just give some critical feedback.
To have a clear and effective strategy we only need a few things:
1. A place to get in – think level or pattern. This could be a line we draw from a previous session or, a candle close.
2. Context – A reason this moment is better than another. Some way of quantifying the level. This could be a pattern, context on a daily/weekly basis or an order flow trigger.
3. Risk : Reward – I believe it is easier to make money when you trade close to a 2.5:1 R:R. We don’t need more than that but we do need to find a way to offset our losses and I am not a fan of requiring a high win rate. (we just take that if it comes to us)
The Feedback Loop
We will build a simple and clear way of reviewing your trades. This can be whatever is best for you. A folder with screen grabs and notes on the chart is great. Something more advanced is good too. We want to be able to reference a chart at any time, go back over the trades from the previous week or, pull up a chart from a specific trading session.
This must include:
1. Notes about what you saw.
2. Notes about yourself, how you felt, what was going on that day.
3. Your trades, in an easy to read manor. We need to know if you took the stops or cut profits early. Nothing is wrong, we just need to track it.
4. Notes about mistakes you made. Simple, clear. We want to map what specifically you messed up and what you did well.
The Team
What I’ve found is that we all do weird things while trading. This is often the most mysterious part of trading. While I don’t have all the answers, I do believe I can help solve some of the mystery. The concept in this portion is worked out from the great trading coach Van Tharp. He refers to it as a “Parts Negotiation”. I like that name but what I find is it can be clearer to simple think of ourselves as having a team of people we work with. Having a career in animation may skew my thinking here but I’ve found it to be very helpful to myself and the people I have worked with thus far.
We will identify what things or competing personalities you might have during a trading session. These competing voices create fear, anxiousness, muscle tension and other inner conflicts. If we can figure out what the personality is, we can hear the voice and call it out before we act on it.
An example:
I have a team member I call “Wing-it Wayne”. Wayne is with me whenever I am working. He’s part of my team. (not in good way) You can imagine the types influenced Wayne might have on the team. He might say things like, “Stop just sitting here, let’s give that a try!” or “You see that good trade you missed for no reason, you should probably just click some buttons”.
We all know the feeling. This all might sound a bit funny but I’ve really found this to be a helpful and simple exercise. It allows us to see ourselves from the outside, as observers.
We can figure out what competing thoughts about trading we have and come to terms with them. Once this is done, there is a huge amount of relief because we can be aligned with trading in a new way. At also allows us to worry less about rules and more about our thoughts.
Your Identity
Do you have rules in place but can’t follow them? Yeah, I did too.
We can’t change our actions by white knuckling a list of rules. This will blow us up ever time. (ask me how I know).
Instead, what we want to do do is begin to build a new trader identity that is in line with who we want to be. We have to believe ourselves to be slightly ahead of where we actually are.
Here is an example:
Often, a trader will tell themselves “I always buy the top and sell the bottom!”. This is probably true! That’s ok.
What they will then do is look at a trade and say “I’m such an idiot, I am not buying this high.” Then the trade will go on to make millions. What happens next time? They buy that high this time and it reverses on them. Then they say something like “See, I am an idiot. I’m lost”.
What could this look like instead?
A trader decided, “I buy strength and I sell weakness”. Now, a breakout comes and they buy it. The trade reverses and they take the stop. BUT, they can say “I don’t feel dumb, I buy strength. Sometimes that means I get stopped out at the high”. This simple but helpful shift in how we see ourselves in the moment allows us to have peace with the outcome of following our process.
When We’re Done
This will be a very practical project with tangible results. What you can expect to possess when finished:
– Your Trading Business Plan
A custom built plan outlining your strength, weaknesses, strategy, cashflow methods, and contingencies.
– Your Trading Strategy
A clarified version of your current trading strategy that looks to capitalize on markets in a way that fits your personality.
– Your Trading Process
A clear set of actions you can take each day to give you the best chance at success executing your plan.
– Your Trader
A solid grasp of who you are as a trader and what you intend to get out of trading as well as a better understanding of yourself in how you make decisions and why.
Working Together
My hope is that, reading through these, they make sense. Again, I am not here to be the holder of mystery. I simply want to guide you through the process of creating your own stability in markets as you look to profit off their behavior and your own.
I work full time and trade during market hours. Therefor, while I can sometimes do a few things here and there, I cannot give good, thoughtful feedback during those times.
The best way to work out this process is through Sunday Emails.
I will want you to send me an email every Sunday afternoon/evening for the weeks you trade. The email can have a video or PDF or write up (video is best) showing what you did that week. If it’s trades, show me what trades you took. If it’s process work, show me that. I want to understand both what you did and what you plan to do the following week. I can respond with an email back giving some thoughts. Sometimes, I may record a video back to you in response.
The setup call – I like to do an hour long call as we’re getting started to establish who you are, where you are in the process and get a sense of where we should start. Plan for an hour, come prepared with what you want to focus on. This is primarily about getting to know you and your trading.
There may be times when we schedule a call to work out some more detailed items or help you get “un-stuck” from something. Especially early on when we’re working to build understanding of your trading.
Timeframe
Typically, we are all busy and while some people might go through this faster than others, I expect to take the time we need to get this done. I’ve structured it so that we will make good progress at your speed but that we are not rushed.
I expect 3-6 months of work here as we work through the items above. Strategy and the Feedback Loop may take the most “work” to tune in but that time frames allows most of the issues we face to come up as well as for the feedback look to work out our trading strategy. We are also not limited to this time frame. I am happy to keep getting Sunday emails as long as you want to send them.