Tag Archives: Trading Business

Managing Trading Decisions with Simple Compliance Checks

 

I want to share a simple process used by a reader in addressing a recurring problem in his trading. I was happy to see him use this approach, because it references a post-session technique I shared quite a few years back.

And perhaps it will be useful to you as well, in ensuring compliance with any changes you wish to make to your trading.

Problem:

With-Trend (WT) trades were providing positive stats but he was consistently giving too much back through his Counter-Trend (CT) trades. The CT trades show some promise so he's not quite willing to abandon them entirely. But he wants to cut back on the number.

So here's the plan:

(a) No CT trades unless the daily P&L is positive.

(b) Aim to ensure that there are more WT trades than CT trades.

The plan for this month is to ensure 100% compliance. Item (a) will avoid his tendency to dig himself into a hole occasionally in fading a trending market. And item (b) will ensure that he is trading (more often than not) in the direction that "should" offer the most opportunity.

One month only. Then reassess.

In particular item (b) because he does recognise that some days are quite rotational and may be better suited to CT trading.

But that's for the future. For this month, 100% compliance. And let's see if that provides improvement to the trading results.

Implementation:

Pre-Session:

  • Reading the plan and making a verbal declaration of intent to comply with both items.

 

In-Session

  • A single sheet of paper with two columns – WT and CT. Place a checkmark after each trade. The aim is to ensure more checkmarks in the WT column than the CT column.

 

Post-Session

  • Addition of two Compliance Check questions to his post-session routine.
    • (1) Were any CT trades taken with P&L at or below zero? If so, why?
    • (2) Did the WT trades outnumber the CT trades? If not, why not?
  • Marking up a calendar with a large green tick if he complied with both items.

 

The use of the calendar is something we discussed here – http://yourtradingcoach.com/trading-business/dont-break-the-chain-a-simple-tool-to-improve-consistency/. The original discussion aimed to ensure consistency in completing each part of your daily routine. What he is doing differently is using this same technique to ensure compliance with desired changes in his decision making. Effectively, using it as a reward or punishment system to guide and shape changes in the way he trades.

I also love the use of green ticks rather than the red crosses we used in the original article. Green ticks provide a more "positive" reinforcement than red crosses.

At Month End:

  • Review the outcome, ideally achieving both WT and CT profits, but at the very least ensuring that CT losses are somewhat contained and do not completely erode the WT profits.
  • Assess the effectiveness of the plan in making positive changes to the trade results.
  • Continue or amend, as required.

 

It's Your Turn to Take Action:

What trading behaviour do you need to reinforce on a daily basis? Is there something you know you need to change, only to find yourself repeating the old behaviour over and over again?

Consider trying a similar process, as described above. Just for a month.

Pre-Session declaration of intent. In-Session tracking to manage your decision making. Post-Session confirmation of compliance and a visual reward system to track your progress.

See if you can keep those green ticks going for the whole month!

It only adds a couple of minutes to your trading routines. But if it can help to reshape your behaviour away from destructive practices, then the benefits could be priceless.

<image: Managing Trading Decisions with Simple Compliance Checks>

Happy trading,

Lance Beggs

 


 

What if you Redefined your Primary Role as a Discretionary Trader?

 

Most discretionary traders see their job like this:

<image: What if you redefined your primary role as a trader?>

What if you switched this around a bit?

What if you redefined your job as follows:

<image: What if you redefined your primary role as a trader?>

Is it possible that relentless focus and commitment to the processes and routines which guide your decision making and behaviour… might just see improvement in the actual trading results?

This doesn't mean we're no longer discretionary traders. Discretion can be built into processes. But how we come about our trade decisions, is standardised and made as consistent as possible.

The following post was shared recently on social media:

<image: What if you redefined your primary role as a trader?>

Essentially, we're expanding upon this idea.

For each of the areas listed in that post, we aim to:

  • Seek excellence in development of routines and processes for carrying out that role, and
  • Seek consistency in implementing the routines and processes.

 

It's said, "That which is measured, improves".

But ONLY if that which is measured is applied consistently.

And consistency will only occur if the process is clearly defined.

So maybe consider a little shift in how you define your role as a trader.

Primary role: Development, out-of-session, of world-best routines and processes for (a) finding and exploiting edge, and (b) reviewing and driving growth.

Secondary role: Trading, for the purpose of implementation, validation and testing of the routines and processes, defined above.

Happy trading,

Lance Beggs

 


 

The Counter-Intuitive Path to Trading Success

 

I recently received an email from a YTC reader with an incredibly important insight into trading success.

Here's an extract from the email:

Hi Lance,

I heard this recently while watching football.

It's not how many great plays you make, it's how few bad plays you make.

I immediately emailed this to myself because it is so applicable to trading. I know where the good places are to trade, but the key is waiting for price to get there and not "forcing" a trade.

It also ties in well to your Facebook posts last week and the latest blog article.

Here is the full quote I found online:

"Like I always say, it's not how many great plays you make; it's how few bad ones you make. I know fans, and even some losing coaches, are enamored with long pass completions or the great run plays, but that doesn't offset the interception or the fumble."… Jimmy Johnson 

Excellent!

I love it!

This is absolutely 100% applicable to trading.

It's the counter-intuitive path to trading success.

Reduce the number of bad trades.

How do we do that?

1. We limit our trading to our best setups only.

Get absolutely clear on what an A+ trading opportunity should look like. And then cut out anything that doesn't meet these strict requirements.

Define the context. Where will these trades be found within the wider market structure? Now limit trading ONLY to those places on the chart.

How should price be moving (speed, volatility, smoothness)? Define your ideal conditions and put in place controls to ensure you trade ONLY when those conditions are in play.

2. We have a predetermined plan for execution.

Now that we're limited to trading only within an ideal context (market structure and price conditions), you need to be completely clear on how you execute and manage your trade opportunity.

Consistency in execution requires standard default plans with regards to sizing, entry triggers, stop and target locations. Plus any additional techniques which might be relevant to your style of trading, such as when you will scale in or out, or under what conditions you will re-enter if stopped out. Your decisions may involve some discretion. That's fine. But this discretion should be built into your standard management plan.

You need to know what to do… and when to do it. No hesitation. 

3. We monitor our performance to identify and reduce errors.

Track everything! If you make an error or poor decision, record it.

Look to your longer term stats during your weekly or monthly reviews. If you find something repeating over time, then that is cause for celebration. You have found a way to improve your edge. Find a way to cut out the error, or at least reduce the likelihood or frequency of occurrence.

<image: Track Your Errors>

Image: Error tracking via the Trading Journal Spreadsheet!

It's not how many great plays you make, it's how few bad plays you make.

Along the same lines, but for those who are not into sport and perhaps relate more to art, I saw this quote recently which I quite liked:

"The sculpture is already complete within the marble block, before I start my work. It is already there, I just have to chisel away the superfluous material."… Michaelangelo

Trading success is already there.

It's just hidden beneath all the errors and poor decisions. We just need to chisel away at them, getting rid of the bad trades and poor decisions, and allow the underlying success to reveal itself.

Trade well,

Lance Beggs

PS. See here also for the same theme – http://yourtradingcoach.com/trading-business/are-you-closer-to-profitability-than-you-thought/

 


 

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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Happy trading,

Lance Beggs

 


 

You’re Fired!

 

I recently sent out the following social media post:

<image: You're Fired!>

This was my favourite reply:

<image: You're Fired!>

Ha ha! Awesome.

All jokes aside though, I think this is just so important. I feel we need to discuss it in greater detail (and get it out to thousands of you via the newsletter, rather than just a few hundred via social media).

That is what we are aiming to achieve – consistent, high-quality implementation of processes on a day-to-day basis.

So, here is the original post again:

If you employed someone to trade your money for you, would you be happy if they prepared for today's session the same way you just did?

Let's extend that idea to all aspects of our daily operations. (Of course, adapt as required to suit your business.)

  • Would you be happy with the way they prepared themselves physically and mentally for the upcoming session?
  • Would you be happy with the way they analysed charts in preparation for the upcoming session?
  • Would you be happy with the degree of focus they applied during the trading session?
  • Would you be happy with the consistency they applied to following any workflow cycles throughout the trading session?
  • Would you be happy with their ability to follow your analysis and trade checklists or routines throughout the trading session?
  • Would you be happy with the way they documented their trade outcome and performance.
  • Would you be happy with the way they reviewed their daily performance and planned for improvements the next day?

 

NOTE that none of the above is concerned with the outcome of trades. Win or lose is irrelevant in this case. I'm concerned here ONLY with how well your employee is implementing your daily processes and routines. If they're providing quality implementation and the results continue to be poor, then that is on you (the employer). You need to provide your employee with an improved plan. For today though, our concern is only with how well they are carrying out your current plan.

You may wish to consider adding a step to your post-session routine, for you (the employer) to grade your trader in all aspects related to quality, consistent implementation.

<image: You're Fired!>

Update daily. Improve daily.

And most importantly, watch for problems which continue to appear on a regular basis. They will need priority attention.

Now, accepting that most of us are both the employer and employee, let me finish with an important point. 

Do not be overly critical of yourself. You need to be as positive and encouraging as possible. But you MUST set clear boundaries as to what IS and IS NOT an acceptable standard of behaviour and effort. And work to improve daily.

Happy trading,

Lance Beggs

 


 

So When Should You Quit?

 

Over the ten years that I've been running this site, I've chatted with quite a few traders on the verge of quitting out of frustration.

In the last month, there have been two. And for both, as for everyone before, I've offered an alternate plan.

Because I don't think frustration is a valid reason for quitting.

For me, there are only two reasons to quit.

Firstly, because of unacceptable threat to relationships, finances, health or lifestyle. (And even then, quitting might just be temporary while these things are put back in order).

And secondly, because the passion is completely gone.

So I thought this might be worth documenting on my website (via this article).

In two parts:

(1) Before you continue on this journey, do this one thing…

Spend some time alone or with your partner and get absolutely clear about this:

  • What are you NOT WILLING to risk losing?

 

Trading DOES pose a threat to relationships, finances, health and lifestyle.

What are you not willing to risk losing?

Document it. Put in place strategies to protect it as much as possible. Define a clear "stop trading" point. And constantly monitor.

If your "stop trading" point is hit, stop trading. Protect what is more important.

For most of us, trading is not an end-goal but rather just a means to provide other benefits. There are other ways to achieve these benefits. Find another path which poses less risk to that which is most important in your life.

(2) Before you quit out of frustration, do this one thing…

Burnt out? Exhausted? Tired? Frustrated?

Completely lost?

Ready to quit?

Fine. It's not for everyone.

Perhaps your path is elsewhere.

But first, here's another idea.

Maybe burnt out is not necessarily an "end-state" but rather a feeling that we get when stuck at some particular stage along the journey.

And if it's just a feeling, then this means there is more journey ahead. We just can't see it right now.

So rather than quit, what if you instead let the emotion and pain subside. And then made your decision with a clearer mind.

Try this plan instead:

  1. Take some time off. Minimum three months. Completely free from all contact with the financial markets and financial media. Ignore all social media from traders. Ignore all email newsletters (including mine).
  2. Then, consider whether or not you want back in.

 

You'll know after a break from trading whether or not the passion remains.

If not, if there's nothing there but dread, you'll know you're making the right decision. Never look back. Surrender yourself to the possibility of new beginnings and new adventures ahead. Your path is elsewhere. Find it.

But if you find something inside screaming in excitement at the idea of getting back into the game, that's fantastic.

Start again. Start smarter.

Burnt out is not necessarily an "end-state". It's just a feeling that we get when stuck.

And it's not the time to be making critical life decisions. Take some time out. And reconsider with a clear mind.

I've recommended this extended break to quite a few traders. Some have contacted me after the three-month break. More often than not they're feeling refreshed and excited about a new start to the game.

But there have been some who found the opposite. They're grateful for having had the break and allowing themselves the chance to reassess. But also incredibly relieved to see that quitting is the right decision. They know with 100% certainty that trading was not the path for them. And they now look forward with excitement as new opportunities open up in front of them.

Take a break. And then reassess. You'll know for sure whether or not the passion remains.

Best of luck,

Lance Beggs

 


 

That is a LONG TIME to be without Internet

 

Thursday 16th March to Friday 2nd June!

That is a LONG TIME to be without Internet

Yes, that’s how long I was without any fixed line Internet at my house.

But that’s what you get when the Government monopolises the internet infrastructure!

Aussie readers, AVOID THE NBN as long as possible.

So thankfully I was prepared and had my backup mobile broadband system in place, ready to take over and keep me trading (albeit with reduced size due to concerns over stability).

Granted, the backup system was only ever expected to be a short-term measure, put in place for short-term outages. Not 11 weeks. But it performed well and did the job it was meant to do.

So… the task for you this weekend…

  • What is your backup plan in the event of internet failure? How quickly can you get back online to manage (or close out) any positions?
  • What is your backup plan in the event of long-term internet failure? How will you manage to continue trading?

 

And if you feel up to it, consider other system failures as well:

  • What is your backup plan in the event of computer failure?
  • What is your backup plan in the event of power failure?
  • (Repeat for any other system your business relies upon!)

 

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

 


 

Trade Less; Review More!

 

Day Traders

If you're not currently profitable, or achieving the level of success you wish to achieve…

Is your current situation something like this?

Trade Less Review More

WRONG! WRONG! WRONG!

I know there is a LOT to be learnt through live trading. But it's the review process which drives growth and development.

You'll see things during a review session, after the fact and away from the emotion, which were not visible in the live market.

You'll discover things within your stats, which were not visible in the live market.

If you want to progress, time for an effective review session is NOT negotiable.

You must make a choice.

You either HAVE TO cut something from the time outside of trading, to allow for an effective review session and ongoing learning.

Trade Less Review More

Or you have to cut your trading…

Trade Less Review More

Trade Less Review More

Longer Timeframe Traders

The same applies to you.

If you're not currently profitable, or achieving the level of success that you wish to achieve…

Is your current situation something like this?

Trade Less Review More

If you want to progress, time for an effective review sessions is NOT negotiable.

You must make a choice.

You either HAVE TO cut something from the time outside of trading, to allow for an effective review session and ongoing learning.

Trade Less Review More

Or you have to cut your trading…

Trade Less Review More

We all want to trade more.

But if you're not yet consistently profitable, or not yet achieving the standards of success you believe you are capable of achieving, then your priority must be ensuring an effective review process as well as time for learning, testing and development.

You can always trade full-time again in the future.

But for now, less is more.

Trade less. Review more.

Happy trading,

Lance Beggs

 


 

Seeing the Market in New Ways

 

An amateur and a professional trader can look at the same price charts and see completely different things.

The difference is not as simple as the professional having a better strategy, but rather that they have superior mental models and belief systems.

They see the market in ways that the new trader cannot yet comprehend.

A lot of my writing has been with the intent of helping shift the way you view markets and price movement.

A key goal with the YTC Price Action Trader was to help you see this trading game in a superior way; playing the metagame rather than the usual pattern-based game that most play.

  • Seeing the charts from the perspective of "traders making trading decisions" rather than just as somewhat random price movement.
  • Feeling the hope and fear within the other traders; especially at the point where they get trapped in a low probability position.
  • And using this information to profit from their loss.

 

The obvious section to reference is the whole of Chapter Two, but the concept underlies all the material which follows through chapters three to six.

Much of the last eight years of the YTC article archives was also devoted to helping you see things in new ways.

Just recently there has been a focus on the following:

 

And a key aim with the upcoming video course will be redefining how you apply deliberate practice principles to drive your growth and development. A recent insight led to a new level of understanding that has completely shifted the way I manage my own progression. I can't wait to share it. More on that later.

Until then though, let's see if you can trigger your own paradigm-shift!

I'd like you to consider the idea that maybe your next improvement in results will not come from a new system, or some new knowledge, but rather from changing perspective and learning to see some particular aspect of this business in a new way.

It's not easy. You can't force new insights. They typically come at unexpected times.

And they often need a trigger to shift your perspective and open up a whole new world of possibilities.

The good news… there is one method that can help provide this trigger… assuming you do have the required foundation of knowledge and experience.

Schedule some time to question your beliefs and assumptions.

You may find they're quite valid. But you may also find a new way forward.

You may find that something you held to be true, is perhaps not 100% certain. 

Time spent questioning your beliefs or your assumptions, is NEVER time wasted.

Consider the following areas of your trading business:

  • Your understanding of how and why price moves.
  • Your understanding of how and why you expect to profit from price movement.
  • Your reasons for market and instrument selection.
  • Your personal routines for achieving and maintaining a peak performance state.
  • Your routines for pre-session preparation.
  • Your method of position sizing.
  • Your method of assessing market conditions and selecting appropriate tactics for those conditions.
  • Your method for rapid recognition of a change in market conditions and adjustment of tactics to suit the changes.
  • Your method for real-time contextual reading of market bias.
  • Your method of identifying trade opportunity.
  • Your method of entry.
  • Your method of risk management.
  • Your method of trade management.
  • Your method of trade exit.
  • Your routines for post-session review.
  • Your routines for longer-term review… and the way you use this to drive further growth and development.
  • Your routines for ongoing personal and professional development.

 

For each of these areas of your business, question your beliefs:

  • What are your beliefs about this aspect of your business?
  • Why do you have this belief?
  • Is there evidence to support this belief?
  • Is there evidence which suggests that it's wrong? Or incomplete?
  • Is it possible that this belief is only valid in a certain context? Only in particular times, or places on the chart, rather than being an always 100% certainty?
  • Imagine a professional trader who has mastered this aspect of the business. Are they likely to operate with the same belief? If not, what would they have to believe in order to operate more effectively?
  • Can you adopt this new belief? What can you do to test this new belief for validity? What actions can you take on a regular basis to reinforce this new belief and instil it into your daily habits and routines?

 

Time spent questioning your beliefs or your assumptions, is NEVER time wasted.

Schedule some time this weekend to question your beliefs.

All the best,

Lance Beggs

 

PS. YTC Price Action Traders: If you need a new way to "question" price movement at the hard right edge of the screen, try the questions listed in section 3.9, on page 209 of Volume 2.