Tag Archives: Review Process

It’s Time to Fight to Get to the Next Level

 

Feedback from a recent article has been so incredibly positive, with a number of emails coming through saying that this was EXACTLY what these people needed to hear right now. It seems one of the most popular articles of the last 12 months.

Check it out here if you missed it – Are You Closer To Profitability Than You Thought?

So let's explore an idea expressed in my favourite line of the article.

And that's the following:

  • "… right now it's time to end the mediocrity. It's time to fight to get to the next level."

There are various levels to pass through on the way to consistent and increasing profitability.

It's Time to Fight to Get to the Next Level

For most of us, there are no short cuts!

There are no Game Cheats that can jump you straight to the end goal.

It's Time to Fight to Get to the Next Level

It's a step by step process of growth and development.

It's Time to Fight to Get to the Next Level

Progress will be slowed (or completely non-existent) if you're plan for progression is unstructured and random.

Here's how to provide some structure.

(1) Find where you currently reside on the above pathway.

Look at results over a recent sample of trades. What you did three years ago is irrelevant. We want to see what you're achieving NOW.

Take a recent sample… 20 trades minimum. And look at the P&L. Where does that place you on the above pathway? (Note: the sample chosen must also represent "typical" current results. If you fluked a massive winner through poor practice (and if you're honest with yourself you'll know if you did that) then exclude that trade. You'll only be cheating yourself if you include it.)

Wherever you are… accept it. There's no point denying it. This is your starting place. You build from here.

(2) Determine the Win%, Loss%, Average Win and Average Loss stats for your most recent trades (20 trade group… minimum).

If you don't have sufficient stats to determine these… you need to keep better stats. Start again with a new 20 trade group and keep better stats.

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Are You Closer To Profitability Than You Thought?

 

If you've been trading for quite a while and seem to be stuck, consider the possibility that the next stage in your journey may not require further knowledge or skill development.

Instead, maybe it requires CUTTING POOR PRACTICE from your business?

Do you know what will happen if you cut areas of underperformance from your business? You'll be left only with areas of best performance. Areas of current best practice. Areas which you already manage well. Areas which, if enhanced even further, may be sufficient to transform your business and take your results to the next level.

Look within your stats and your journals. Find where you currently perform best. And focus exclusively on that area of your business.

Look within your stats and your journals. Find where you perform poorly. And cut it from your business. Implement procedures or controls to avoid it, or to mitigate the risk.

Do you struggle with a strong trend due to a tendency to always try to fade the trend? Stop promising yourself that "Damn it… Next time I'll just trade with-trend!" You know that you won't. If you could, you already would. You've promised yourself that you would do that too many times already. Focus instead on identifying those conditions in which you outperform… perhaps ranging action or slow and stable trends… and ONLY TRADE AT THESE TIMES. Develop rules for quick recognition of suitable trading conditions, and to alert you to those times when you should just walk away. Specialise in ranging market conditions. Or specialise in slow and stable trends. Whatever works best for you! But recognise and avoid the strong, fast trends if they're destroying your edge.

Do you struggle in choppy, sideways price action but outperform in directional markets? Identify structural features that suggest initiation of a new trend. Wait for these to develop… confirm the trending action… and engage the market. But otherwise, stand aside.

Do you underperform in volatile conditions? Measure market volatility and stand aside when it reaches these higher levels.

Do you underperform in markets suffering low levels of volatility? Again, measure market volatility and only trade at times when the market is moving.

Do you struggle in conditions of low liquidity? Stop trading markets or times which suffer from low liquidity.

Do you find yourself underperforming in slow and thick market conditions with high overlap between price bars? Then implement some method of identifying and trading only when price has some directional conviction and is flowing smoothly.

Do you struggle in timing tests of support or resistance, when price turns just before the level? Then forget about them. Cut them out of your business. Don't trade unless price breaks the level, focusing solely on breakout failures or breakout pullbacks.

Are pullback entries destroying your edge, when there is no structure to lean against? Then only trade a pullback when it moves into areas of prior structure (swing highs or lows). Or require that it develops it's own structure first before considering pullback entry. Only enter when you have some level to lean against.

Do you trade multiple strategies? Is one underperforming? Cut it. Focus on what is working best.

Do you trade one strategy across multiple timeframes? Perhaps a "daily chart" strategy alongside intraday swing trading? Is one destroying your profitability? Cut it. Focus on what is adding the most to your profitability.

Do you trade multiple markets and find that some only contribute breakeven results AT BEST. Cut them. Focus on those that you read the best.

Do you have a tendency to often give back profits during the afternoon? Stop trading at midday! Or set a session P&L trailing stop.

Are the opening sequences consistently putting you in a hole, requiring that you spend the next couple of hours fighting just to get P&L back into the green? Then stand aside at the open. Let the market create some structure first.

You don't have to do it all. Cut areas of underperformance. Or if not possible, then work to limit their impact.

And work to specialise in areas of your current strengths.

Is there one setup in which you perform the best? What could happen if you focused exclusively on that setup for the next few months?

Is there one type of environment in which you perform the best? What could happen if you focused exclusively on that environment for the next few months?

You may be thinking, "But won't this seriously limit the number of trades I take?"

So what!

Are you here for lots of trading action? Or are you here to become a trader?

Look within your stats and your journals.

Find where you perform best.

Cut the rest and FOCUS only on developing and enhancing that which you already do best.

You can always address the areas of poor performance later, if you choose to do so.

But right now it's time to end the mediocrity. It's time to fight to get to the next level.

Cut what's not working. And focus only on areas of current best practice.

Perhaps you are closer to profitability than you thought?

Happy trading,

Lance Beggs

 


Reviewing Key Price Action Sequences

A great way to learn to read price action is to review your historical price charts, with a focus on the price action at key structural locations.

Find and review anything which fits these categories.

  • tests of significant levels
  • breaks of significant levels
  • traps
  • transitions between trends and ranges
  • transitions from volatility contraction to expansion
  • and in fact anything else that stands out on the chart

 

Each day, identify a key price sequence.

Study it and learn.

It only takes a minute.

Let's look at an example in which Crude Oil breaks higher in Monday's session, into layered levels of range resistance, before falling back into the range.

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Learning – When the Markets are Closed

Even when markets are closed there is great potential to improve as a trader.

Here are a few options, aside from the obvious which is reading trading books (especially this one).

Market Replay – Missed Sessions

We discussed market replay previously (see here).

This is by far the greatest tool available to you for after hours learning.

Here's one way you can use market replay to improve your skills…

I don't like to ever miss a trading session. Sometimes though, life gets in the way and it's unavoidable. This is where market replay helps me out. Later, when time comes available, that session is replayed as if live.

Last week I missed Friday's session. My family and I had to depart early on Saturday morning to travel several hours for a family function later that day. Given that my timezone (Australian east coast, UTC+10) means that Friday's session commences at midnight Friday night, I made the decision that it's wise to miss this session. Travel is never fun after only an hour or two of sleep… plus it's just not safe.

On return home late Sunday, after the family was in bed, I replayed the opening hour from Friday nights emini Russell session.

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Post-Session Chart Review

We recently shared some post-trade reviews from Josh, who is doing exceptional work in creating a trade review journal for his longer timeframe forex trading (daily charts).

See the trade reviews here if you missed them: http://www.yourtradingcoach.com/trading-business/Trade-Review-Examples/

But a trade review journal is not the only option you have.

Today I'd like to share a chart that came to me with some email Q&A, from Greg, who also operates in the forex markets but on much shorter timeframes.

What I like about this is the fact that Greg produces a chart like this after EVERY session. He keeps them in a personal blog; but you could do the same via any journaling application or even printouts stored in a binder. 

Greg displays the trading timeframe chart overlayed with the following information:

  • Key support and resistance levels

  • One or two key price action or market structure observations (eg. something that stands out with regards strength / weakness analysis, traps or price interaction with key levels)

  • Setup opportunity (with a hindsight bias)

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Trade Review Examples

The following trade review examples have been taken (with permission) from some email conversations with Josh, a trader of the YTC Price Action Trader methodology.

He's still in the early stages of his development, developing confidence in his strategy and processes through historical chart review. He's doing this using ForexTester software which allows for trading of historical charts as if it were a live market environment.

Josh has been making tremendous progress. The two most recent months results were as follows:

March:

  • 25 trades
  • 16 winners
  • 9 losers
  • Average win: $249.42
  • Average loss: $141.94
  • win%: 64%
  • win/loss size ratio: 1.75 : 1

April:

  • 13 trades
  • 9 winners
  • 4 losers
  • Average win: $401.72
  • Average loss: $190.28
  • win%: 69%
  • win/loss size ratio: 2.11 : 1

In both cases the win percentage is really healthy. And the winners are significantly larger than the losers. Too many people over-analyse their individual loses in attempt to avoid them in future. By all means analyse them and improve your knowledge and skill. But accept as well that you'll always have losses. And as long as you manage them, as Josh has been doing (ensuring they're cut short and that the winners are held for larger profits) then the losses are quite acceptable.

What is not to love about those stats. Josh has a great edge here… evidenced as well by the nicely rising equity curves for each month, and the distribution graph showing larger bars on the winning size (also included in his email but not shown here).

This is great trading.

My advice to him: Continue exactly as he's been going.Set this as his benchmark (or even set slightly worse) and continue from here aiming for consistency in results. If he can maintain this approximate performance for another 18 hindsight based months, I'd want to then see him transition to forward testing. (Note: a month of hindsight based trading using forextester does NOT take a month… just in case you were worried about how long this might take!)

But that's not the point of this article!

Rather, I want to talk about a key part of the process that Josh used to get to this point.

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Every Session Contains Learning Opportunity

Every session contains learning opportunity!

In fact… multiple learning opportunities.

Review EVERY one of your trading sessions. And find something!

Whether it's in something you did poorly, something you did really well, or perhaps even something you missed entirely. There's a lesson. Find it!

Whether it's a new insight. Or reinforcement of the basics. There's a lesson. Find it!

Let's look at this session:

trading - find the lesson

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Are You Creating and Using Your Market Structure Journal?

Are you creating and using your market structure journal yet?

If not, why not?

(If you're not aware of what that is, why not? It's on my ebook page. See "The Greatest Trading Book – Ever!" at http://www.yourtradingcoach.com/ebooks/)

It doesn't matter which market or timeframe you use. Market structure concepts apply to all markets and timeframes. Price action concepts apply to all markets and timeframes, if you want to include them in your journal. YTC Price Action Trader principles apply to all markets and timeframes, if you want to include them in your journal.

In my opinion this is an essential tool for learning and development.

Just do it! 

Any market; any timeframe!

Stocks… NSM daily chart:

market structure journal example

Forex… EUR/USD 1 hour chart:

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Reviewing Old Charts

Reviewing Old Charts (AKA… "I can't believe I held the trade past that stop loss")

I highly recommend keeping ALL your old trading charts and journal notes.

They're great to review each now and then.

Not only do they offer educational value but they also offer a source of motivation in allowing you to see the incredible progress you've made, as well as a source of amusement at how you could have been so naive. 🙂

I would have bet good money on the fact that I'd NEVER consciously made a decision to hold a trade beyond the initial stop loss. I certainly don't ever remember doing so; and was aware of the concept of risk management at the start of trading as it's a fundamental part of a prior career.

And so, on Tuesday as I was flicking through some old folders of trade data and chart printouts, I was incredibly surprised to find a trade which I held past the stop.

It was early 2003 and I was trading Aussie stocks. In this case it was Croesus Mining (CRS). The strategy at the time was one of identifying a strongly trending market and buying after a pullback followed by evidence of continuation. I was operating from the LONG side only, as do most stock traders. This may have been a good idea had the market as a whole been trending upwards, but early 2003 was the latter stages of the several year bear market. As such, the strategy produced a disappointing mix of winners and losers for approximate breakeven results overall. Perhaps this would have come good if I'd continued into the following several years of bull market; but that wasn't to be. In the months following this trade I made the transition to options in order to allow easier access to both long and short directional plays. This also involved a variation in strategy.

Here's the CRS trade (Yeah, I really did use line charts at this time!  I didn't buy my first "real" trading platform till mid 2003.)

(Click on the image if you wish to open a larger copy in your browser window)

reviewing old trades

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