Tag Archives: Learning Process

My Go-To Method for Solving Trading Problems – Part Two

 

Part One is here if you missed it – http://yourtradingcoach.com/trading-business/my-go-to-method-for-solving-trading-problems/

In that article I presented a three question framework which I use to seek solutions to any of my trading problems.

  1. Can I avoid the problem?
  2. Can I reduce the frequency?
  3. Can I reduce the consequences?

 

Or in simpler English:

  1. Is there something I can do that will ensure I never even encounter "the problem"?
  2. Is there something I can do that will ensure "the problem" won't happen as often as it has been?
  3. Is there something I can do such that when "the problem" does occur, the negative outcome won't be so
    bad?

 

To work through an example, we used a question I received on Twitter a short while ago:

<image: The problem...>

In other words…

  • An inability to trust a rally resulting in continued attempts to fade the rally and grinding your way into a completely avoidable drawdown.

 

Visualising "the problem", it would be something like this:

<image: The problem...>

I then requested your feedback on how you might solve such a problem through either one or all of the three questions.

Well didn't that create a lot of work for me! Ha ha.

I must say I was blown away by both the number and quality of the responses. I am 99% certain I replied to all of them. If I missed yours, please let me know.

Rather than simply listing all of the responses here (because there will be a lot of repetition), I will instead just summarise the main ideas:

 

Can I avoid the problem?

Is there something I can do that will ensure I never even encounter "the problem"?

This is my first go-to option. If I can find a solution here that is quick and easy to implement, I'll try this first.

This is recognising that often we don't need to address the problem and its myriad of potential underlying causes, if we can just avoid it.

If you get sick eating seafood… just don't eat seafood.

So looking at the problem of a trader who continually destroys their session through fading a bullish trend, how can they avoid it?

Many of you came up with the same idea that immediately pops into my mind for the "Avoid" category:

Don't trade bullish environments!

You said:

<image: The problem...>

You ask for help changing your mindset. But it's much quicker and easier to:

(a) Accept that this is how you are.

(b) Study your trade history to understand the market structure or environment which leads you to struggle.

(c) And develop clear and unambiguous rules to avoid this structure or environment in future.

In other words, ONLY trade in an environment which is naturally suited to short selling.

And avoid everything in which short selling is a lower probability option.

Maybe something like this:

<image: Avoiding the Problem>

<image: Avoiding the Problem>

Or maybe you will have some better idea. After all, you know your trading.

The point is… you need to dig into your trade history. Find and understand the conditions that lead to you fighting a bullish trend. And then set in place rules to avoid them.

Don't try to solve the problem. Avoid it.

Rather than fighting your bias, accept it and embrace it. And maybe specialise in being a short-seller in bearish market environments.

Note what we've done here. The problem still exists. You still have a strong preference for short entries. And the potential for danger still exists if you acted upon this tendency in a strong and persistent uptrend. But you've avoided the problem by setting clear and unambiguous guidelines which seek to avoid these uptrending environments.

We're not trying to find a way to comfortably trade long in an uptrending environment. We're not trying to find a way to improve our skill in shorting an uptrending market. You can work on these later if you wish. First things first though – let's stop the damage through the quickest means available. Identify an uptrending market and stand aside.

Avoid the problem… it's often the quickest and easiest solution.

 

Can I reduce the frequency?

Don't like the "Avoid" solution?

Ok. That's fine. You won't always find an answer. And you won't always find an answer you like. Let's move on to the other two questions.

Is there something I can do that will ensure "the problem" won't happen as often as it has been?

So here, we're not trying to avoid bullish environments. We're not limiting ourselves to certain sections of the market structure.

We are allowing ourselves to trade in a bullish environment.

But we need some solutions to ensure that when it is bullish, we can (at least sometimes) find a way to align ourselves in that bullish direction, thereby reducing the number of times we find ourselves fading the trend.

Again the responses from readers were spot on, with the following being the main ideas:

Limit to with-trend trades only.

Very closely related to the above solution. But this time we operate with clear and unambiguous rules that limit our trading to with-trend only.

Limit yourself to short opportunity when the trend structure is bearish. Limit yourself to long opportunity when the trend structure is bullish. And stand aside when the trend structure is neutral, sideways or uncertain.

Naturally this doesn't guarantee trading success. Recognition of the environment will not always be perfect. Quick recognition of change of environment will not always be perfect. Execution will not always be perfect. And compliance with our rules may not always be perfect. That's fine. We will deal with this separately if it becomes a problem.

But what this does achieve is that it ensures you will rarely find yourself repeatedly fighting a bullish market.

Trade with a guard rail.

No-one picked up on this solution. But it's one of my personal favourites so I'm going to include it here. I've recommended this to several people over the years, with great effect.

I like clean charts without indicators. But that does not mean I'm against the use of indicators if they add value to your trading. And one good use for an indicator is to provide confidence through placing a "guard rail" at your back

<image: Reducing the Frequency>

This doesn't seek to avoid bullish environments. And it doesn't prohibit trading short. Instead it acts to increase confidence in holding a long position, thereby reducing the frequency with which you'll find yourself repeatedly fighting the uptrending market.

Multiple Scenario Planning

Always have in mind multiple potential paths for price action. Ideally at least one bullish and one bearish scenario.

You're fighting the uptrend because you believe it should be moving lower. But have you actually viewed the charts too see if there is the possibility of a bullish scenario?

Assuming the market had a chance of going up today, what could it look like?

If you have pre-accepted multiple scenarios for potential price movement, and at least one of them involves price moving higher, you're more likely to recognise and accept the bullish conditions when they occur and more easily able to align yourself in that direction.

Trading level to level

Overlay the higher timeframe market structure with an S/R grid and use that to define the general market bias as price moves from level to level.

Again, this works like the idea of multiple scenario planning, discussed above. It's harder to get stuck in a mindset of "this market should be moving lower" when you've defined clear levels and have accepted that the market is bullish while above certain levels.

Limit counter-trend short entry to key levels only.

Extending the idea above of trading level to level, this now also gives us a solution for how we can still trade short against a rising uptrend.

Limit that sort of trading to ONLY the times when price interacts with one of our higher timeframe levels.

All other action, away from these levels, is limited to with-trend (long) opportunity.

Overwhelm yourself with study after study of bullish market environments.

One response suggested reviewing 100 days of uptrends. Ha ha!

Absolutely yes. This will leave you in no doubt about the fact that markets can and do go up a whole lot more than you expect. It's a beautiful solution.

What is good about the 100 charts solution is that it goes a long way to correcting the faulty underlying beliefs, leading the trader to somewhat accept the idea that markets can safely rally. And while you may at times slip back into old habits of fading the trend, the frequency of occurrence will be reduced due to the many times now when you find the confidence to go long with the trend.

Operate with multiple independent methods of assessing bias.

No-one guessed this solution. It's one of of the ones I came up with, which I think could be effective in limiting how often you get stuck fighting a trend.

I assume that you're operating at the moment with two means of identifying the potential future movement of price – some form of assessment of the trend PLUS gut-feeling. And in your case the gut-feeling is over-riding the trend analysis.

Maybe try increasing the number so that you have three or more independent methods of assessing bias, one of which might still be gut-feeling. Perhaps add some market internals, or VWAP, or a higher-level orderflow tool like cumulative delta. When a majority of methods are suggesting a bullish bias, this may give more confidence in trading in this direction and ignoring the gut feeling of "it should be bearish"

Operate with multiple independent methods of assessing bias AND a measure of confidence.

Taking the above idea one step further, why not add a degree of confidence to your gut-feeling.

We previously discussed this idea as it relates to price targets – http://yourtradingcoach.com/trading-process-and-strategy/applying-a-degree-of-confidence-to-price-targets/

It applies just as well to your bias.

"Ok, I feel like it should be going down… with maybe 60% confidence… but given all the other methods are suggesting bullish then 60% is clearly not enough. I'm trading with-trend."

Turn the chart upside down.

I didn't expect this response but ended up getting it twice.

I actually tried this myself several years ago. Like the reader who posed the question, I also have a preference for short trades. Not to the same extent where it damages my edge. But it's simply a case of short trades feeling comfortable while anything long is really uncomfortable. Even to this day. It just doesn't ever go away.

Back in the days of Ninja Trader 7, I came across an indicator which flipped the chart upside-down.

Perfect. Problem solved. Whenever there was a bullish market, I'd simply shift my focus from my normal chart to the upside down chart, so that it looked bearish.

It works surprisingly well. I could take a long position in that uptrending market, and hold it quite comfortably, simply because it looked like a short position in a down-trending market.

Unfortunately though, I couldn't execute from the chart. So I got rid of it and went back to normal charts.

But if you have a different platform which offers the ability to flip charts, or someone who can code a solution, this might be an option for you.

 

Can I reduce the consequences?

Is there something I can do such that when "the problem" does occur, the negative outcome won't be so bad?

Again we don't seek to avoid bullish environments. And this time we don't want to limit our ability to short an uptrending market.

But is there some way we can do this more safely, such that the damage incurred will be less in those times we do get it wrong?

Reduced position sizing for counter-trend setups.

Not necessarily a permanent solution. But perhaps one you can use temporarily, until such time that you can improve your skill in timing a counter-trend short entry.

Cut your size to the absolute smallest allowed in your market.

Continue to monitor stats and the impact these setups have on your edge. If you can't develop a positive edge, you will eventually need to abandon them. But until you've accepted that once and for all, cut the size to ensure smaller losses.

You can always increase again if you improve in skill to the point where these trades are providing a positive input to your edge.

Limit counter-trend drawdown to a fixed number of losses.

I've talked about my personal rule before: When two trading ideas fail to work, I consider the need for a break. When three fail to work, I force a break. Either I'm wrong about the market bias, or my execution is poor, so I have no business trading. Take a break. Walk away. Do not come back till your mind is clear and the structure and conditions have shifted to something more tradeable.

If you can do this, the consequences of fighting a market bias will be reduced to (at worst) three losses.

Better counter-trend entries… closer to the stop.

There was only one response which suggested this. I like it.

It attempts to limit the consequences of fading a persistent uptrend through bringing your entry price closer to your stop. Maybe this will be enough to bring these sequences closer to breakeven or small profit.

The suggestion was that, rather than using your entry signal as a trigger to place a MARKET or STOP entry order, you use that signal as a trigger to place a LIMIT order higher. You're fading the trend. There is a good chance of some retrace. So try to take advantage of it and improve your entry price.

As with any of these "reduce consequences" options – they're still allowing you to trade in the environment that was causing problems, in the direction that opposes the market bias. So you need to monitor stats and track the impact this has on your edge. As mentioned above, if you can't get this to provide a positive edge then you seriously need to abandon this idea of trading counter-trend against a bullish market.

 

Wrapping Up

So there we are. It really is quite simple.

In the majority of cases all we had to do was come up with a set of rules to limit our ability to short an uptrending market. The markets offer incredible freedom to enter and exit at any time of your choosing. Successful traders place limits on this freedom, to ensure trade decisions have the greatest chance of providing a positive edge.

For the trader who sent me the original question: Your path from here is to identify the potential solution (or multiple solutions) which you feel may best suit your needs. And test it. Implement the idea through a trial period, tracking the results to confirm whether or not it was effective.

For everyone else: The point of this was not to provide you with techniques to limit the damage from constantly selling into an uptrending market. Rather the point was to demonstrate the problem solving framework in action.

And given the number and quality of responses I received, it's clear that many of you have seen how easy it is to come up with solutions.

That is where the three questions help. They provide some structure to your decision making, taking you from "stuck" to at least having some idea of where to look.

This works not just with "I keep getting run over by an uptrending market". You'll find it helps with many problems throughout your trading career. So whenever you're stuck, ask:

  1. Can I avoid the problem?

  2. Can I reduce the frequency?

  3. Can I reduce the consequences?

 

Sometimes, depending upon the type of problem being solved, you'll find some overlap between the "Avoid" and "Reduce" categories. You might have felt that with the solutions presented above. If you feel a solution that you come up with fits best in the "Avoid" category while I put it in one of the "Reduce" categories, that is fine. Either way the three-question framework has led you to a potential solution. That is all that matters.

Happy trading,

Lance Beggs

 


 

PS. What are Questions Four and Five?

I was asked by a few people about questions four and five in the original framework. I didn't include these as they're not relevant to most trading problems. But for those interested, here they are:

4. Can I transfer the risk?

This typically means to shift the risk to another agency which is better able to manage or accept that risk. For problems outside of the trading world, insurance is the perfect example of this solution. Faced with the risk of loss of property, we can transfer this risk to another party through purchasing insurance cover.

In trading, an example of risk transfer might include building up a track record via sim and then seeking employment with a Prop firm, or perhaps seeking funding through one of the online sites which provide such a service. Not a viable solution for problems of continually fading a rallying market, as you'll quickly find yourself unemployed. But certainly it is a solution that could be perfect for other problems, such as lack of funding.

5. Can I accept the risk?

Sometimes, having considered options for avoiding, reducing frequency, reducing consequences or transferring the risk, we find that there is NOTHING MORE that can be done. We then have no option but to accept it. In other words, do not worry about things you cannot change. Consider whether or not that is acceptable. Sometimes it is.

 


 

My Go-To Method for Solving Trading Problems

 

The internet is full of problem-solving models and systems.

But here's one I've been using my whole trading career.

It's a simple series of three questions.

A subset of five questions regularly used back in my Aviation days in order to manage risks (only three of the five are usually relevant in the trading field).

<image: My Go-To Method for Solving Trading Problems>

Three simple questions:

  1. Can I avoid the problem?
  2. Can I reduce the frequency?
  3. Can I reduce the consequences?

 

Putting this perhaps into simpler English:

  1. Is there something I can do that will ensure I never even encounter "the problem"?
  2. Is there something I can do that will ensure "the problem" won't happen as often as it has been?
  3. Is there something I can do such that when "the problem" does occur, the negative outcome won't be so bad?

 

Most importantly, we're not after vague "touchy feely" solutions.

So I don't want an answer of "I just need to be more disciplined" or "I just need to try harder".

This social media post from last year comes to mind.

<image: I just need more discipline... WRONG>

We want REAL solutions.

Something actionable. Something measurable. Something testable.

Systems. Routines. Processes. Checklists.

Or anything else technical or process driven in nature.

Let's work through a simple example.

We'll use a question I received on Twitter a week ago:

<image: The problem...>

Visualising "the problem", it would be something like this:

<image: The problem...>

So how can we solve this?

Rather than me giving my solutions, I think we'll get more value if we make this interactive.

I want to hear some of your solutions. And then I'll share some of them next week in a continuation of this article.

So, given this problem:

  • An inability to trust a rally resulting in continued attempts to fade the rally and grinding my way into a completely avoidable drawdown.

 

How can we solve it?

Can you find a solution through one, two or even three of these simple questions:

  1. Can I avoid the problem?
  2. Can I reduce the frequency?
  3. Can I reduce the consequences?

 

Or in simpler English:

  1. Is there something I can do that will ensure I never even encounter "the problem"?
  2. Is there something I can do that will ensure "the problem" won't happen as often as it has been?
  3. Is there something I can do such that when "the problem" does occur, the negative outcome won't be so bad?

 

Please leave a comment in the blog post – identifying both the question that you're using and the solution. Or send an email to support@yourtradingcoach.com

To be continued…

Lance Beggs

 


 

Find Your A+ Trades

 

Let's continue this recent theme…

  • Focus on the areas of the market structure that jump out at you. The sequences that are so obvious, so easy, that you'd be kicking yourself if you missed the trade.
  • Identify them. Study them. Learn from them.
  • And then trade ONLY them… until you've got a proven edge.

 

These are potentially your A+ Trades. The ones you will aim to master.

In last weeks article, I shared what I consider to be one of my A+ trades – http://yourtradingcoach.com/trading-process-and-strategy/focus-on-catching-these-trades-first/

This was followed up with a social media post on Tuesday, comparing the trade sequence from that article with another from a previous article.

Note the similarity…

<image: Your favourite trades should all look the same>

The key point, repeated for emphasis:

These trades come easy to me. The ones that come easy to you might differ from this. Your job is to find YOUR OWN A+ opportunity and get to know it in detail. There are more trades coming soon. You need to be ready.

Do you want another one?

<image: Your favourite trades should all look the same>

<image: Your favourite trades should all look the same>

<image: Your favourite trades should all look the same>

Note again how similar it looks in structure to the prior two trades. Your favourite trades will all share similar qualities.

And this first pullback after a change in structure IS one of my favourites.

It might not be one of your favourites. And that's fine. The idea is not that you should start trading these setups.

You need to find your own.

  • Focus on the areas of the market structure that jump out at you. The sequences that are so obvious, so easy, that you'd be kicking yourself if you missed the trade.
  • Identify them. Study them. Learn from them.
  • And then trade ONLY them… until you've got a proven edge.

 

If you're struggling, then please note that this could be the key insight you need. 

I received some great feedback from a YTC reader, TK, in response to last weeks article. Here's an excerpt from his email:

Hi Lance,

I just wanted to thank you for the last Friday's article and let you know that I find articles on this theme of great value.

This is exactly what makes all the difference for me. The shift in mindset that made me focus on the moves that I find obvious and easy has greatly improved my trading. I regularly come back to the article "Focus on the obvious moves first" that was the first article that made me review my trading and think about whether I take mostly the obvious trades or not. This has helped me to get rid of many marginal trades.

Last week's article reinforced this practice for me. I think that this may be a key thing that developing traders need to focus on. If I may, I would suggest that you follow up with more articles like this, that would be great.

This is the article he referred to, as being originally responsible for the new and better understanding – http://yourtradingcoach.com/trading-process-and-strategy/focus-on-the-obvious-moves-first/

Be sure to read it.

Why?

Repeating the key point from the email: "This is exactly what makes all the difference for me. The shift in mindset that made me focus on the moves that I find obvious and easy has greatly improved my trading."

Could this be the difference you need as well?

Happy trading,

Lance Beggs

 


 

Focus on Catching These Trades First

 

There are some trade ideas you look at with hindsight which are quite complex and which may have been difficult to execute.

And there are others which jump out at you as being really simple.

If you're not yet profitable, then focus on the SIMPLE trade ideas.

Identify them. Study them. Learn from them. And then trade ONLY them… until you've got a proven edge.

What you see as simple may be different to what I see as simple. But essentially, we're talking about those you would call your A+ trades.

Look at any historical chart. They're the trades which your eyes go straight to. The ones that are immediately obvious. The ones that you'd be kicking yourself if you missed.

They're the simple ones.

They're the ones you need to focus on first.

For me… one of my favourites is the first pullback following a significant change in structure.

<image: Focus on catching these trades first>

This trade… and every trade like it… jumps out of the chart at me.

If there is a "first pullback after a change of structure" trade that I miss, I'm seriously not impressed with myself.

Here's what I was seeing as it unfolded:

<image: Focus on catching these trades first>

<image: Focus on catching these trades first>

<image: Focus on catching these trades first>

<image: Focus on catching these trades first>

<image: Focus on catching these trades first>

<image: Focus on catching these trades first>

<image: Focus on catching these trades first>

What trade opportunities jump out of the chart to you?

Identify them. Study them. Learn from them. And then trade ONLY them… until you've got a proven edge.

They're the simple ones.

They're the ones you need to focus on first.

Happy trading,

Lance Beggs

Additional Notes:

1. YTC Price Action Trader readers – From the YTC PAT perspective the trade is simply the first PB opportunity after a transition from uptrend to downtrend. The classification of uptrend is not immediately obvious due to the lack of structure this early in the session. In the absence of any pre-session data, I will usually make use of any opening gap and also an opening range bias. With both being bullish in this case, I'm happy to call an uptrend.

2. Note the similarity with the trade in this post. Even though it's pattern sets up on the higher timeframe chart, the concept is exactly the same. You'll start to notice that after a while – all your good trades share similar qualities.

3. The reference to 11:30 is of course my timezone (UTC+10). The time at the exchange is 09:30. This is the time that stocks commence trading on the Hong Kong Stock Exchange.

 


 

Slow, Steady, Incremental Progress

 

Excerpt from an email from J.L.

  • Finally, do you have any articles that could be helpful going from sim to live?

 

Let's write one now…

Do NOT rush.

The markets will always be there, ready and waiting for when YOU are ready.

The journey takes as long as it takes. And the psychological challenge is different at each level of risk.

So aim for slow, steady, incremental progress.

Let's break the journey into stages, noting that this is for discretionary traders. Systems traders will use a different process.

 

Stage 1 – Historical Chart Study

Stage 1 involves study of past data in order to achieve the following two aims:

  • Understanding the strategy – HOW to trade it and WHY it should work.
  • Confirming potential for edge through study of historical chart sequences.

 

This stage takes as long as you need it to take, until the point at which you you understand the strategy and believe it has potential for edge.

The key word above is "potential". Any edge you perceive through historical study is only a potential edge. It needs to be proven at the hard right-hand side of the screen, with real-time data. This will be done in the following stages. For now – just confirm that all evidence appears to show edge.

The more thorough your work at this stage, the greater the likelihood that you'll not be wasting your time in the following stages with a strategy that does not offer any real long-term sustainable edge.

 

Stage 2 – Simulation – Proving Edge

Stage 2 involves operating the strategy in a simulated environment in order to confirm the edge is real.

Some people are tempted to skip this stage, through concern that a simulated environment does not offer the same psychological challenge of a live environment. But that is exactly the reason why you should start on the sim – keep it simpler. Why risk actual funds when the edge is not yet proven. Take the time to prove the edge in the simpler and safer environment, without this higher degree of psychological challenge. Then, once proven, you can advance to the live environment with a greater degree of confidence in the strategy and your ability to trade it.

Slow and steady!

Incremental progress!

We will be analysing our trade performance in groups of trades. So you need to start by determining a suitable group size for analysis of stats, ensuring that groups will contain no less than twenty trades. It doesn't really matter whether your groups contain a variable number of trades (perhaps weekly groups, or daily for more active traders who complete dozens per day), or whether your groups contain a fixed number of trades (20 or 50 or 100 trades). Pick something that makes sense for your frequency of trading. Just ensure it's no less than 20 trades. And be consistent.

Trade a complete group, recording your individual trade results in your Trading Journal Spreadsheet. While trading a group your concern is not profitability but rather consistency of process and quality of execution. Your trading should be carried out with minimum size, simulating the EXACT processes you will follow when you first transition to the live environment.

Only when the whole group is complete should you concern yourself with performance. Analyse the stats for the group, in particular the win percentage and win/loss size ratio. Confirm whether you have proven edge across this sample of trades.

If edge is not proven, determine which group statistic is underperforming. And then study the component trades to identify (a) one potential cause of this underperformance, and (b) a plan to improve performance over the next group. Now document the changes and start again with the next group.

If edge is proven, congratulations. Now do it again.

Repeat the process until you can prove edge in terms of profitability and consistency, maybe five times in a row. Only then should you consider transitioning to a live environment.

 

Stage 3 – Live Environment – Proving Edge

Stage 3 takes you live, with the ABSOLUTE MINIMUM exposure to risk that your strategy and your market allows. That is, the smallest position sizes possible.

The aim is to trade in exactly the same manner as just carried out in the simulated environment. The only change should be live execution and the additional psychological challenge of having money at risk.

Be completely clear regarding your maximum acceptable drawdown during this stage. And commit to dropping back to the sim again, should this limit be hit.

Slow and steady!

Incremental progress!

Performance will again be assessed in groups of trades, using the same group size as when sim trading.

Trade a complete group, recording your individual trade results in your Trading Journal Spreadsheet. While trading a group your concern is not profitability but rather consistency of process and quality of execution.

Only when the whole group is complete should you concern yourself with performance. Analyse the stats for the group, in particular the win percentage and win/loss size ratio. Confirm whether you have proven edge across this sample of trades.

If edge is not proven, determine which group statistic is underperforming. And then study the component trades to identify (a) one potential cause of this underperformance, and (b) a plan to improve performance over the next group. Now document the changes and start again with the next group. If performance is completely unacceptable then consider dropping back to the sim.

If edge is proven, congratulations. Now do it again.

Repeat the process until you can prove edge in terms of profitability and consistency, maybe five times in a row. Only then should you consider increasing risk.

 

Stage 4 – Live Environment – Improving Edge

Stage 4 is a never-ending process of stretching yourself to new levels of performance.

Identify the change you wish to make, ensuring that it is in ONE PART of the process.

The obvious example here is an increase in size. Make it a small and incremental increase.

But this may also be any changes to process. Keep it small and incremental. One change at a time.

Performance will again be assessed in groups of trades, using the same group size as in previous stages.

Trade a complete group, recording your individual trade results in your Trading Journal Spreadsheet. While trading a group your concern is not profitability but rather consistency of process and quality of execution.

Only when the whole group is complete should you concern yourself with performance. Analyse the stats for the group, in particular the win percentage and win/loss size ratio. Confirm whether you have proven edge across this sample of trades.

If edge is not proven, determine which group statistic is underperforming. And then study the component trades to identify (a) one potential cause of this underperformance, and (b) a plan to improve performance over the next group. Now document the changes and start again with the next group. If performance is completely unacceptable then consider rolling back the changes in order to return to something that was working, before again attempting change at some point in the future.

If edge is proven, congratulations. Now do it again.

Slow and steady!

Incremental progress!

Two final points here.

Firstly you should never completely trust an edge. Maintain constant vigilance. Continue to monitor the stats for your groups of trades, in order to confirm not just profitability but also some degree of consistency from group to group.

And secondly, if you're not growing as a trader, then the problem is that your review processes are not driving any growth. Fix your review processes.

<image: If you are not growing as a trader, this is the problem...>

Best of luck with your journey.

Remember, there is no hurry.

Slow and steady!

Incremental progress!

Lance Beggs

 


 

What if you Narrowed Your Focus?

 

For those day traders who might be stuck in a cycle of continual failure… what if you narrowed your focus?

<image: What if you narrowed your focus?>

<image: What if you narrowed your focus?>

<image: What if you narrowed your focus?>

Some days there might be no opportunity. That's fine.

Other days there might only be one trade opportunity. Again that is fine.

The idea is that this is not necessarily a permanent change to your trading.

It's simply a narrowing of focus to ONE key segment of the trading session.

Master this one key segment – the opening hour.

Prove you have edge in managing the opening sequences of your trading session.

And only then expand to further opportunity.

Let's look at another session:

<image: What if you narrowed your focus?>

<image: What if you narrowed your focus?>

<image: What if you narrowed your focus?>

And again:

<image: What if you narrowed your focus?>

<image: What if you narrowed your focus?>

<image: What if you narrowed your focus?>

For those who trade differently, whether through higher timeframes or multiple markets or in fact any other difference, see if you can adapt the same general concept to your own trading.

Narrow your focus. Build expertise and prove edge in ONE key sequence at a time, or ONE market at a time, or ONE A+ setup type. Whatever works for you.

Narrow your focus.

And fight to get off that cycle of continual failure.

Best of luck,

Lance Beggs

 


 

30 Days to Becoming a Better Trader

 

Before departing on holidays recently I preloaded Facebook and Twitter with 30 posts to help improve your trading business.

And it seems that people loved them. I had a few requests to put them all together in one group.

So here they are. (Also in PDF form here if you prefer – http://www.yourtradingcoach.com/products/ebooks/30-days-to-becoming-a-better-trader.pdf)

They're all quite simple. Just 30 questions to get you thinking about your trading business. If something catches your attention, explore the idea deeper. It might lead nowhere. But it might also lead to improvements in process or even new sources of edge.

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<image: 30 days to becoming a better trader>

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<image: 30 days to becoming a better trader>

<image: 30 days to becoming a better trader>

<image: 30 days to becoming a better trader>

<image: 30 days to becoming a better trader>

<image: 30 days to becoming a better trader>

<image: 30 days to becoming a better trader>

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<image: 30 days to becoming a better trader>

<image: 30 days to becoming a better trader>

<image: 30 days to becoming a better trader>

<image: 30 days to becoming a better trader>

<image: 30 days to becoming a better trader>

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<image: 30 days to becoming a better trader>

<image: 30 days to becoming a better trader>

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<image: 30 days to becoming a better trader>

<image: 30 days to becoming a better trader>

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<image: 30 days to becoming a better trader>

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<image: 30 days to becoming a better trader>

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<image: 30 days to becoming a better trader>

Happy trading,

Lance Beggs

 


 

Never Stop Experimenting

 

Growth never stops.

Schedule some time to play. To experiment. To explore.

Often it will lead nowhere.

But sometimes it might create new insights which transform your trading and your life.

Persistent thought 1: "Is there any reason why I have to wait till 0930ET (12:30am my time)? When "life" allows, why don't I trade the currencies from 0800 to 0930 and then shift across to my normal market?"

Persistent thought 2: "I really need to explore the idea of scaling in – spreading an entry across a zone rather than going all-in."

If you're like me you'll find thoughts and ideas repeatedly competing for your attention.

Don't discard them. Their might be gold in those ideas.

But don't let them distract you from your main job of trading your current defined strategy.

Schedule some time outside of normal work hours for play and experimentation.

You never know what you'll discover.

<image: Never Stop Experimenting>

<image: Never Stop Experimenting>

<image: Never Stop Experimenting>

<image: Never Stop Experimenting>

<image: Never Stop Experimenting>

Persistent thought 1: "Is there any reason why I have to wait till 0930ET (12:30am my time)? When "life" allows, why don't I trade the currencies from 0800 to 0930 and then shift across to my normal market?"

I enjoyed this. It's been quite a long time since my last play with currencies.

And while life doesn't usually allow me to be ready for trading by 11pm, I see absolutely no reason why I shouldn't consider trading the currencies on those odd occasions when it does. It certainly beats sitting and waiting for another hour and a half.

Persistent thought 2: "I really need to explore the idea of scaling in – spreading an entry across a zone rather than going all-in."

I've tried this several times in the past, but always abandoned it. It's clear my strength is precision entries, all-in, with imperfection managed through scratching and re-entering as required.

And yet the idea keeps persisting. I will likely play with this more, as time allows. But I have to make sure that when I feel the trade tipping in my favour, I've got to get full size on.

In any case… today's goal of simply experimenting in the hour and a half prior to the US emini open… was a resounding success.

If you're like me you'll find thoughts and ideas repeatedly competing for your attention.

Don't discard them. Their might be gold in those ideas.

But don't let them distract you from your main job of trading your current defined strategy.

Schedule some time outside of normal work hours for play and experimentation.

You never know what you'll discover.

Happy trading,

Lance Beggs

 


 

How to Kick-Start Your Growth and Development

 

If your progress has stalled in any way, it is just SO IMPORTANT to realise the following truth:

Progress comes from your growth and development plan, not from your strategy.

This just won't work:

The typical failed process

Hoping, wishing and praying doesn't work.

Just trying harder doesn't work.

You need something ACTIONABLE.

Let's fix it NOW:

STEP ONE: Implement a growth and development plan based upon GROUPS OF TRADES.

Here is the concept. Review the following articles:

(a)  http://yourtradingcoach.com/trading-business/its-time-to-fight-to-get-to-the-next-level/ 

(b)  http://yourtradingcoach.com/trading-business/its-time-to-fight-to-get-to-the-next-level-examples/

(c)  http://yourtradingcoach.com/trading-business/you-can-do-this/

(d)  http://yourtradingcoach.com/trading-business/consistency-its-a-necessary-part-of-the-process/

(e)  http://yourtradingcoach.com/trading-business/before-making-changes-to-your-strategy/

A GROUP OF TRADES Growth and Development Process

Also… any changes you're making…  consider making them the stretch goal for your next group.

See here – http://yourtradingcoach.com/trading-business/stretching-to-the-next-level/

A stretch goal - just a little stretch beyond current capabilities

Most importantly, major process changes can only occur at the end of each group. And they must be based upon proper review and analysis of your group stats and journal entries.

STEP TWO: Intra-group, monitor daily to ensure consistent implementation of your process.

No major process changes occur here.

Only tweaks or minor changes to how you execute your processes.

A daily review to improve implementation of your processes

Now move the response to question three to tomorrow's pre-session planning.

Remember:

Progress comes from your growth and development plan, not from your strategy.

If you're not progressing, then something HAS TO CHANGE.

Something actionable.

Something concrete.

Between groups, you MUST identify a concrete, actionable improvement to process.

Within groups, you MUST monitor consistency in implementing process, and tweak as required to improve implementation.

Hoping, wishing and praying that somehow this time it will be different, doesn't work.

Just trying harder, doesn't work.

Find something REAL that you can implement.

It won't always be easy. In fact it will rarely be easy. But damn it, you can't progress by just continuing on the same treadmill.

Fight to find an actionable change that progresses you in the right direction. Implement it. Repeat.

You can do this, 

Lance Beggs

 


 

Employing a Self-Distancing Strategy to Improve Journaling and Review

 

Close your eyes and imagine a really bad trading session. You might have a recent example you can use. Or if not, just make one up.

The details don't matter. They'll vary for each of us. Just make it bad.

Maybe this:

"I drag myself into the office and throw my bag on the floor. Feeling crap with a hangover and too little sleep due to last night's celebrations. It's 10 minutes till market open. No problems. I'll catch up on the pre-session admin later and just wing it. I'm on my third coffee already – this should help me make it through ok."

The market opens and drives higher with strength. "Suckers… it's right into resistance. I'll short here and catch the move back down to the market open."

Of course, it loses!

As does the second attempt. And the third. And the fourth, which had the stop pulled even higher, because "this damn thing is so overbought".

Or maybe your example is something much worse.

Whatever it is, close your eyes and visualise it. And feel every feeling that such a session would bring.

Disgust! Anger! Frustration!

Now, the session is over. You've smashed your keyboard and it's time for review. Close your eyes and imagine yourself critiquing your performance.

SERIOUSLY!

Close your eyes, visualise this scenario. And then critique your performance.

Now let's shift the scenario slightly.

This time the session went exactly the same, but you weren't the trader. The trader was the person you most love in life. Your partner. Your Mum. Whoever you care the most for.

And you're their coach. The person they come to after each session to discuss their performance and to plan the way forward.

Close your eyes and imagine how you would handle their performance review.

Visualise it.

Feel it.

If you've been honest with yourself, it's likely that the first scenario would have been far more emotional. Quite likely an explosive, self-critical and self-deprecating review.

Whereas the second, while still noting that the performance was unacceptable and must lead to change, would likely be more calm and rational. With a more considered review of both the reasons for the poor performance and the solution that is necessary to prevent recurrence.

This simple shift in the scenario has created some space, or distance, between our rational mind and the emotion associated with the trade performance.

 

Self-Distancing Strategies

I absolutely love this article by Brad Stulberg in NYMag.com:

http://nymag.com/scienceofus/2017/02/self-distancing-will-help-you-make-smarter-deciions.html

Please read it. It will take about 10 minutes, tops.

Some key excerpts:

  • Collectively referred to as “self-distancing,” practices like those outlined above and Rusch’s “pretend you’re talking to a friend” allow us to remove our emotional selves from intense situations, paving the way for more thoughtful insight and subsequent decision-making.
  • Employing a self-distancing strategy allows you to evaluate activities or situations that are rife with passion from an entirely different perspective, one that includes logic alongside emotion.
  • “I talk to myself all the time,” says Rusch. “It’s just that when I talk to myself as myself, I tend to be negative and not so helpful. But when I talk to myself as if I were talking to a friend, my words are motivating, forgiving, and far more productive.”

 

Employing Self-Distancing Strategies to Improve Journaling and Review

I will be employing these ideas in two ways:

(1) Journaling

Here's another excerpt from the article:

  • Similar studies show that when individuals think, or journal, in the third person rather than in first person — for example, “John is running into challenges with his business that seem insurmountable” versus “I am running into challenges with my business that seem insurmountable” —they, too, evaluate themselves and their situations more clearly and with more wisdom.

 

I now journal in the third person.

Give it a try for a month. You can always go back to normal if you don't like it.

(2) Reviews

All reviews (session reviews and longer term reviews) will now be conducted as if I am the "Performance Coach" reviewing a trader within my firm.

Again, give it a try for a month. You've got nothing to lose.

And if you can separate your rational and logical side from the emotion of the session, just a little, there is a WHOLE LOT to potentially gain.

 

Why Not Get Started Right Now?

That trading you did so far this year is no longer yours. It was done by your best friend, your partner, or some other loved one.

You are now the performance coach.

And it's time for you to honestly review their trading business.

Close your eyes and imagine the review session. And answer the following questions.

  1. Did they approach these recent months with clear and realistic goals for growth and development?
  2. Did their performance drive them successfully towards achievement of their goals?
  3. Are the goals still appropriate, or do they need amending?
  4. What action must be taken in the coming months to take decisive steps forward?

 

Calmer. More rational. More logical.

And far more likely to lead to practical and effective decision making.

Give it a try!

Happy trading,

Lance Beggs