Category Archives: Trader

Trader – In this category our interest is in exploring all aspects of peak human performance, including: (a) Examination of the human body and mind and the ways that they impact upon our trading results, both positively and negatively. (b) Exploration of learning theory and the ways to maximise the development of knowledge and skill.

What’s Going On when you Hold Past the Stop

 

I'm always fascinated to hear from traders who have trouble exiting a trade at the stop loss. The ones who move the stop loss further away to avoid the exit. And then move it further. And further.

Until eventually, they can't take the pain any more, so they get out of the trade and destroy several days, weeks or even months of profits.

Personally, I don't recall ever holding past the stop, although I have found evidence of having done it once in the past while reviewing old charts.

Hopefully this was a one-off occurrence. Either way, I've clearly learnt from that at some point.

No-one likes a loss. Me included. But you need to be quite comfortable taking them.

For those of you who have yet to learn how to take a loss, let's discuss what is happening when you hold past the stop.

(Noting of course that this is not always the only issue. Maybe not even the primary issue. Everyone's situation is somewhat unique. But it is a significant factor that I see in a whole lot of cases. So if you're letting price run through you're stops, give this some consideration. It may just be the pathway you need to explore to find your way to greater success.)

This is what we're talking about…

<image: What's going on when you hold past the stop?>

<image: What's going on when you hold past the stop?>

<image: What's going on when you hold past the stop?>

<image: What's going on when you hold past the stop?>

<image: What's going on when you hold past the stop?>

<image: What's going on when you hold past the stop?>

<image: What's going on when you hold past the stop?>

In many cases the primary issue is NOT that you fear losing any money.

Often instead, the problem is that you don't want to be wrong.

YOU DON'T WANT TO BE WRONG!

You rationalise that if you just give it a little more room, and a little more time, price will turn around and prove you right.

It's all ego!

What does it mean to be wrong?

Every trade you get wrong is a dagger in the heart, reminding you of every time you've been painfully wrong in the past. Every time you've failed at something. Every time you fell short of your hopes, dreams and prayers.

Every wrong trade is one small step closer to the ultimate failure of your trading business.

And when you're no longer worthy… what will your family think of you? What will your friends say about you? What will your own mind say about you as you desperately try to fall asleep each night to forget the pain?

You don't want to be wrong!

So you move the stop to give it a little more room. But the fear only increases as price continues to move against you.

You give it more room. Again the fear increases.

And then again… you give it more room.

Until finally… acceptance… you know you're wrong.

And now it's about the money.

The loss is big, but fear of it getting even bigger lets you get out. Because you KNOW you're wrong.

Again, please note that this is not always the only issue. Maybe not always the primary issue. Everyone's situation is somewhat unique. But it is a significant factor in a whole lot of cases.

So if you're letting price run through you're stops, give this some consideration. It may just be the pathway you need to explore to find your way to greater success.

Here's the problem, as I see it.

You're playing the wrong game.

You're playing a game of individual trades.

But this business is not about individual trades.

The outcome of any one trade is irrelevant.

We profit over a series of trades.

You need to accept that this game is not one of being right. But rather one of managing a sequence of wins and losses so that over a large enough sample we can produce a profit.

Wins!

And losses!

They're just a part of the game.

What if you accepted that half your trades would win and half will lose. And you made it your aim to ensure that over any series of trades (20+) your average win was greater than your average loss?

To do this, you absolutely CANNOT let your losses run larger than they need to be.

Take your losses, quickly and decisively. Keep them small. It's only one in 20+ trades in your current series. You've got a whole lot of trades still to come. And some of them will more than compensate for the small loss.

By all means, aim for as high a win rate as you can achieve. But seriously… a 50% win rate IS enough. Just aim to ensure your average win is greater than your average loss.

Happy trading,

Lance Beggs

PS. If this article was useful, you might want to read this as well – http://yourtradingcoach.com/trading-process-and-strategy/Winning-Through-Losing-Better-1-of-2/

 


 

The Mindset of a Champion

 

This social media post from last Sunday is just SO IMPORTANT, I thought we should expand upon it and get the ideas out to the whole YTC audience.

<image: The Mindset of a Champion>

This is just a perfect example of a growth mindset, viewing losses as feedback that serve to drive further improvement and growth.

There are two things that I love about this.

1. It is SO ACTIONABLE.

Look to your own post-session procedures and ensure that you are approaching your review in the same way.

Serena Williams:

  • "I'm already deciphering what I need to improve on, what I need to do, what I did wrong, why I did it wrong, how I can do better…"

 

Let's make this relevant to our job:

  • What decisions were less than ideal? (Consider all aspects of today's trading, including your physical, mental and emotional state, your work environment, your ability to analyse the market, to get in sync with the price action, to recognise opportunity and to execute on that opportunity.)
  • Why did I make these decisions?
  • What alternate decisions would have improved my performance?
  • What can I do to ensure I make better decisions in the future?

 

2. It finishes with POSITIVE ENCOURAGEMENT.

After the review is complete and steps for improvement have been identified…

Serena Williams:

  • "OK, I do improve with losses. We'll see how it goes."

 

"I do improve with losses."

Beautiful!

Zero baggage carried forward into the next game.

Consider adding that to your own post-session procedures:

  • "I do improve with losses. Let's see how it goes tomorrow."

 

But Wait… Let's Make this Even Better…

Sunday's post also featured some great points from Nicholas…

<image: The Mindset of a Champion>

<image: The Mindset of a Champion>

If you want to be great you cannot settle for "good enough". You need to CONSTANTLY PUSH TO BE GREATER.

So let's improve the earlier post-session review items, ensuring they consider all sessions regardless of whether we outperformed or underperformed.

Step 1:

  • What decisions were less than ideal? (Consider all aspects of today's trading, including your physical, mental and emotional state, your work environment, your ability to analyse the market, to get in sync with the price action, to recognise opportunity and to execute on that opportunity.)
  • Why did I make these decisions?
  • What alternate decisions would have improved my performance?
  • What can I do to ensure I make better decisions in the future?

 

Step 2:

  • What decisions were excellent? (Consider all aspects of today's trading, including your physical, mental and emotional state, your work environment, your ability to analyse the market, to get in sync with the price action, to recognise opportunity and to execute on that opportunity.)
  • Why did I make these decisions?
  • What can I do to ensure I continue to make similar decisions in the future?

 

If you want to be great you cannot settle for "good enough". You need to CONSTANTLY PUSH TO BE GREATER.

Growth will be found at and beyond the edge of your comfort zone.

Welcome the frustration!

Welcome the pain!

Welcome the challenge!

And use it to DRIVE YOURSELF TO HIGHER LEVELS OF PERFORMANCE.

Happy trading,

Lance Beggs

 


 

Learning from Baseball’s “Mental Reset”

 

I recently sent out the following two posts via social media, discussing the importance of having a plan in place to quickly clear your mind and get back into the game, whenever you sense frustration of any kind:

<image: Learning from Baseball's "Mental Reset">

<image: Learning from Baseball's "Mental Reset">

In response to these posts, I received the following exceptional email:

Hi Lance,

I liked your recent Twitter post about your "Regroup Procedure" after losses and thought I'd share something I learned while playing college baseball that I have applied in my trading.

We practiced what we called our "Mental Resets" while batting. A mental reset is required whenever anything "shocks" you and gets you off your plan at the plate. Every time you walk up to the plate, you should have a pre-meditated plan of the pitch you are looking to hit and anything that can dissuade you away from that plan has to be combated with a mental reset to get you BACK to your plan.

The physical act of mentally resetting is to: Step out of the batters box, focus on a small spot on your bat (we call it our "zero point"… We want to get back to zero emotionally), and take a slow deep breath. You then reaffirm your plan in your head, and step back into the box with confidence.

Our 5 Automatic Mental Resets were:

1) Swinging at a pitch that doesn't match your plan… – Swung at a bad pitch… step out of the box and RESET.

2) NOT swinging at the pitch that you were looking for… – You had a plan and for whatever reason you didn't pull the trigger on your pitch… RESET.

3) Bad call by the umpire… – You didn't think it was a strike and your upset. The umpire is out of your control… Step out and RESET.

4) Brush back… – You almost just got hit by a pitch. Your heart rate is too high and you aren't in a good state to be confident stepping back into the box… Step out and take a MENTAL RESET to bring you back to zero.

5) Changing of plan… – Something happened that requires a quick change of your plan (the most often one being moving to a 2 strike approach once you get 2 strikes on you)… – Change of plan… Environment has changed, we need to RESET here.

You don't have much time in between pitches to cool off, so if something upsets you, it is extremely important that you use a Mental Reset to keep your focus and get back to your plan. I think it is the same thing with trading… especially shorter time-frame trading. You don't have a lot of time to sit there and be upset. You have to RESET.

I thought you might find this parallel of Trading to Baseball interesting.

Cheers,

Alex

Thanks Alex. That is EXACTLY what I was talking about. Except your baseball analogy explains it just SO MUCH BETTER.

I called it a regroup (based on a term from my military days where a unit facing attack might drop back in order to reset and reorganise, in order to continue fighting).

Baseball calls it a mental reset.

The concept is the same.

When something has put your mindset on tilt then you need to step back away from the charts and reset or reorganise yourself, in order to return to the game with a clearer and more highly-focused mindset.

I've found this most effective when it involves a predefined and practiced ritual, such as my regroup checklist or Alex's routine for focus on the bat, slow breathing and reaffirmation of the plan.

To continue with the baseball theme, I'm reminded of a video which I shared a few years back.

The whole video is worth watching from a trading mindset perspective. But take note at 7:55 and you will see Evan Longoria complete his version of a mental reset.

(If the video is not playing here, click on this link to go direct to YouTube.)

Do you have a regroup or reset procedure?

If not, develop one now. Start with mine. Or adapt the baseball mental reset shared by Alex.

And then over time, amend it and make it your own.

As they say in the video, you need to have something to go to when the garbage hits the fan. Because the garbage will hit the fan. So let's be ready for it.

Happy trading,

Lance Beggs

 


 

A Small Hack which has GREATLY Improved Consistency

 

For years now, I have been trading with a 5-minute countdown timer.

When it counts down to zero it sets off a buzzer before resetting and starting again.

<image: A small hack which has greatly improved consistency>

This served two purposes.

(1) It brings my focus back to the markets, in the event that it's slipped away (not unusual given that I trade overnight).

(2) It reminds me to carry out a process checklist which cycles through various aspects of higher and trading timeframe analysis. The aim here is to maintain some "bigger picture" situational awareness.

But here is the problem…

The buzzer has become such a common occurrence that it tends to slip into the background of my awareness. Especially if I'm getting tired. I effectively just IGNORE it.

Damn you brain!!!

It worked great for the first few months.But for quite a long time now, it just hasn't been effective. (The buzzer, I mean. Not the brain!)

So here's a little hack. It's an idea I got from the TV show "Lost".

In "Lost" there is a countdown timer that must be reset every 108 minutes, otherwise the world ends. The important difference is that this timer must be reset BEFORE it hits zero. It's not reset AFTER reaching zero, like my little timer.

So what if I did the same thing?

What if my intent was to complete my regular "situational awareness" routine and manually reset the timer BEFORE it hits zero, or else the world ends and we all die in a fiery inferno?

Disclaimer: The world doesn't really end. It's just a game!

Sounds good so far. Apart from the dying bit.

The results have been tremendous.

Simply shifting my intent from "taking action AFTER the buzzer goes off" to "taking action BEFORE the buzzer goes off… or else everyone dies", has dramatically improved my consistency.

It's turned the process into a game. Into a bit of fun. I can maintain a higher state of focus for most of my trading session. And it REALLY annoys me when I slip up and let it hit zero.

Particularly because I changed to the standard Windows-10 Alarms & Clock app. When it hits zero it sounds an alarm and displays a pop-up notification, and DOESN'T STOP until I manually stop it. It's damn annoying.

<image: A small hack which has greatly improved consistency>

If you also struggle with consistency in applying regular routines or procedures, consider trying this little hack.

It kind of adds to the enjoyment of the day.

But more importantly… it seems to work.

Give it a try. Reset that timer. And help me keep the world safe.

Lance Beggs

 


 

Remain Focused and Get In on the Retest

 

The aim of today's post is to highlight two lessons we discussed in previous years, which came into play in a recent price sequence.

<image: Two lessons from the YTC archives>

<image: Two lessons from the YTC archives>

<image: Two lessons from the YTC archives>

We don't profit from regret. We profit from quality decisions in the NOW.

So when you miss a price sequence that you feel you "should have" caught, you need a way to move past it quickly to ensure that it doesn't negatively affect further decision making.

I find these two lessons quite effective in helping me get over missed opportunity: 

Lesson 1: It wasn't mine to catch. If it was, I would have caught it. Let it go.

Lesson 2: Remain focused. There might just be an opportunity to get in on a retest.

Happy trading,

Lance Beggs

Related article: It Wasn't Mine to Take but the Next One Will Be

 


 

Improving and Maintaining FOCUS for Day Traders

 

This is not for those who trade longer timeframes. If you trade the 15 minute chart or higher then you should NOT be aiming for constant screen watching all day. Set alarms to monitor price on completion of each trading timeframe candle. And price alerts to bring your attention back to the charts at key levels.

If you trade the 5 minute chart, perhaps you'll want a blend of the two. Alerts when price is well clear of potential setup areas. Screen watching only when there is potential for trade opportunity.

But below 5 minutes, you'll likely want to spend considerable time watching the price movement.

And for you, it's important that you develop a plan to achieve peak-performance levels of focus.

<image: FOCUS>

Photo by Stefan Cosma on Unsplash

Here are my thoughts:

Let's start by reviewing one of the key ideas in the article on discipline.

Read it here if you missed it: http://yourtradingcoach.com/trader/how-can-i-get-more-discipline/

In that article, I suggested that you can't "get more discipline". Discipline is actually an outcome. And it comes about through effective HABITS and STATE MANAGEMENT.

The same applies when we think about focus.

Focus is not something you can just get more of. Again, it's an outcome. And it comes about through HABITS and STATE MANAGEMENT.

We aim for habitual use of processes in our pre-session, during session and post-session routines, in order to establish a focused state. And to return quickly to the focused state if our mind should start to wander.

And we aim to place our body, mind and soul in as much of a peak-performance state as we can, in order to best maintain effective levels of presence, awareness and FOCUS.

So let's split this article into two parts, turning the idea of "focus" into a daily habit, and then ensuring effective state management.

Here's my plan:

Habits

1. The Power of Intention

There is nothing I've found more powerful in kick-starting my daily habit and ensuring disciplined focus than the power of intention.

This is a documented part of my pre-session routine.

It is simply a verbal statement of intent that "Today I WILL focus on the charts. I will not allow myself to open my browser for any non-trading purpose".

That is obviously set up for my most common distracter. "I'll just have a quick look at email and social media."

Adjust the statement to suit your own needs. But be sure to give it a try.

I can confirm through having monitored this as part of my review process, that days which begin with a verbal statement of intent are typically more focused than days when I did not make the statement of intent.

2. My Focus Statement

This is used during the session, whenever I have caught my attention wandering.

Here it is via a recent share on social media:

<image: FOCUS>

3. Regular Checks

Every 30 minutes I check my personal state. This includes an assessment on how effective I was in maintaining focus.

If particularly good or bad, I'll jot down some notes.

These then feed into the post-session review.

And if poorly focused, it's back to the statement of intent and the focus statement (above). 

4. The Focus Alarm

I don't always use a focus alarm. I find if used continuously that it tends to just disappear into the "background" after a while.

But from time to time, in particular if slightly fatigued, it has helped.

It's simply an alarm that goes off on the close of EVERY trading timeframe candle. It sounds a bit extreme. But it works. You can of course set it for longer if you prefer. Or shorter.

But it acts as a "wake up" to not only shock me back into focus if I've slipped away again, but also allowing me to "update" my market analysis with this new candle information.

I use SnapTimer, but there are dozens online if you don't like it.

5. Post-Session Review

The 30 minute notes on your ability to maintain focus are pointless if you don't review them.

So post-session… review them.

And then, if you were not particularly effective, aim to identify why and find a way to improve tomorrow.

State Management

1. Eliminate Distraction

Your mind cannot be focused if it's surrounded by multiple temptations or distractions.

The mind is NOT a multi-tasker.

Remove all distractions – social media, internet, phones, pets, kids, and whatever else acts to take your attention away from the charts.

For web browsers, you can find apps which block access to them during preset times each day. Keep one browser available though (not the one you usually use for surfing). If your platform goes down or you get other tech issues, you're going to want some way of getting online quickly.

2. Adequate Rest

Set a minimum standard for rest. And stick to it.

See here for mine – http://yourtradingcoach.com/trader/trader-fatigue-management/

3. Adequate Hydration

There's a water bottle just off to my right. Always accessible.

Essential.

Get one for your trading room if you don't have one.

4. Physical Health

This kind of goes without saying. If you struggle with focus, exercise better and eat better. Simple!

You will notice improvement in all areas of your life.

5. Relaxation processes

I have regular breathing routines from back in my Tai Chi & Chi Gung days.

If you don't, Google search it.

Find some exercises to relax the mind, body and soul.

6. Stimulants

Coffee pre-session. To be honest I'm not sure on the science of this one. It is effective for me, given the night hours I trade. But not too much. One a half-hour before trading seems to help me. Give it a try.

I have a glucose lolly pre-session. And then a second during the session if I feel a bit flat. See here – http://www.nytimes.com/2011/08/21/magazine/do-you-suffer-from-decision-fatigue.html?pagewanted=all

I've heard chocolate helps. But maybe I'm making that one up because, you know, chocolate!   🙂

I've heard blueberries are good for a sharp mind. Give that a try if you're not a fan of chocolate. (Send me your chocolate!)

Chewing gum, while not exactly a stimulant, seems to work well in dissipating any nervous energy that can act as a distraction.

7. Regular Breaks

Always aim to spend a few minutes every half hour AWAY FROM THE DESK.

Get up. Stretch. Go for a walk. Whatever you need.

Just get away from the charts to reset your mind.

8. Regular Exercise

Consider incorporating this into your breaks.

Nothing gives you a "wake up" quite as effectively as a short, sharp burst of exercise.

9. Background Music

Nothing with lyrics. EVER.

But experiment with background ambient music, binaural beats or isochronous tones. Or whatever works the best for you.

It's a process of trial and error. Add this to your post-session review until you find a number of preferred solutions.

10. Standing Desks

I don't have one right now due to the current layout of my trading room. But I've used this in the past to great effect.

Seriously, it works incredibly well.

Raise your desk. And stand back a bit, out of arms reach of the keyboard and mouse.

Step forward ONLY when it's trade time.

It's just you and the charts. Absolutely NO WAY to click on that web browser, even if you wanted to.

If Nothing Else Works

I've yet to see a trader try this but it looks like it has potential.

– – –

Well that just about wraps it up.

What have I missed?

If you have any tips or techniques which you've found effective for improving or maintaining focus, let us know in the blog post comments.

Best of luck,

Lance Beggs

 


 

It Wasn’t Mine To Take. But the Next One Will Be.

 

You can't catch every good price move.

<Image: It wasn't mine to take. If it was, I would have caught it.>

<Image: It wasn't mine to take. If it was, I would have caught it.>

<Image: But if I focus, the next one will be.>

<Image: But if I focus, the next one will be.>

<Image: But if I focus, the next one will be.>

<Image: But if I focus, the next one will be.>

<Image: But if I focus, the next one will be.>

<Image: But if I focus, the next one will be.>

<Image: But if I focus, the next one will be.>

 

You can't catch everything. If you miss a good move, remind yourself:

  • It wasn't mine to take. If it was, I would have caught it.

 

Now focus. There is more opportunity coming and it needs your full attention.

Happy trading,

Lance Beggs

 


 

Is This a Trade You Would Take if You Were in Drawdown?

 

Some of my better trades lately seem to occur after a string of marginal trades which either stop out or seriously underperform.

Mostly because of my rule which says that after two poor trades I need to step aside, clear my mind and reassess the situation.

Time out!

Reassess!

It prevents a downward spiral of emotional revenge trading.

And allows me to return to the market with a new plan. Usually, a plan which waits for a change of structure and takes the first pullback opportunity within that new market regime.

<image: Two trades placing me in drawdown.>

<image: Time out. Reassess.>

<image: Consider the options when price breaks current structure.>

<image: Entry>

<image: Exit>

So this brings me to an idea that may help me cut out some of the more marginal trades.

And perhaps may help you with improving your trade quality as well.

Rather than waiting for two marginal trades to place me in drawdown, maybe I could trade "AS IF" I were already in that situation.

Prior to entry, ask:

  • "Is this a trade I would take if I were in drawdown?"

 

If so, go for it.

But if not, maybe pause and reassess.

Sometimes it will keep you out of a winner. That's how this game of probabilities works.

But if it's keeping you out of a number of marginal trades then there could well be a positive change to your edge.

If the idea appeals to you, give it a try. But track the impact it has on your edge over a series of "avoided trades".

Prior to entry, ask:

  • "Is this a trade I would take if I were in drawdown?"

 

<image: This IS a trade I'd take in drawdown.>

Happy trading,

Lance Beggs

 


 

Trading Alongside the Uncertainty and Fear

 

I shared the following post via social media on Wednesday:

<image: What if it's ok to feel uncertain?> 

Without doubt, this is one of the key lessons we must learn on the way to becoming a professional trader.

And so I was incredibly pleased to get the following reply:

<image: What if instead we learn to operate alongside the uncertainty and fear?>

Brilliant!

Thanks A.H.

This is exactly the right approach to the presence of the fear and doubt.

1. Recognise the emotion.

Just briefly, bring your focus back from the external (charts) to the internal (your body and mind). Notice what you're feeling.

2. Acknowledge the emotion.

Accept it. You can't fight it. You may as well welcome it.

If it helps… verbalise it.

3. Understand the emotion.

What is it trying to tell you? There is information there. Find it!

4. Review the trade premise.

Often you will find that steps one to three will significantly reduce the severity of emotion.

So the final step – review the trade premise from an objective chart-based perspective.

With the emotion acknowledged and diminished, does the trade premise actually contain edge?

If so, go for it.

<image: What if instead we learn to operate alongside the uncertainty and fear?>

<image: What if instead we learn to operate alongside the uncertainty and fear?>

<image: What if instead we learn to operate alongside the uncertainty and fear?>

<image: What if instead we learn to operate alongside the uncertainty and fear?>

If it helps, consider creating a "pre-entry mantra" to shift your focus inside and recognise, acknowledge and understand any emotion that may impact upon your trading decisions and actions.

With experience (and of course proper risk control) fear and emotion will reduce. But it never completely goes away.

You can't fight it.

Accept it. And learn to work alongside it.

Happy trading,

Lance Beggs

 


 

An Entry Mindset with a Whole Lot Less Fear

 

The whole analysis process for a novice trader is aimed towards finding a winning trade.

Sure, they know intellectually that not all trades will win.

But surely this one… the one they worked so hard for… the one that all their analysis says is a good trade… it's just got to win!

And then they enter the trade…

An Entry Mindset with a Whole Lot Less Fear

Gripped by the fear that comes with every tick of price movement, they increase the risk of mismanaging the trade. They increase the likelihood of underperforming. And they risk potential damage to their self-belief.

What if there was another way?

What if you had a different mindset?

What if you stopped trying to find winners?

An Entry Mindset with a Whole Lot Less Fear

An Entry Mindset with a Whole Lot Less Fear

An Entry Mindset with a Whole Lot Less Fear

That's a key difference.

A novice is trying to find a trade that will win.

I'm trying to find an entry that is worthy of being one of twenty.

I don't need a winner.

I place all the odds in my favour. And I take the trade.

An Entry Mindset with a Whole Lot Less Fear

This is an entry that is worthy of being one of 20 within the group.

It doesn't need to be a winner.

The whole group of 20 needs to win.

So this trade just needs to get me off to a good start – profiting if it can, and just minimising the damage if it can't.

A slightly different mindset…. but with a whole lot less fear.

Happy trading,

Lance Beggs