EXTEND YOUR TIME HORIZON ON BUILDING WEALTH, STOP
SEARCHING FOR TRADES AND ALLOW THE TRADES TO COME
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Practicing your wealth building with trading being an activity in your
wealth building, in a way that minimises your potential or projecting your
beliefs onto the chart.
Today I am going to talk about the importance of TRACKING in your trading success….(Watch the Video 19 mins)
We’ve spoken a lot about extending time horizon, about being a wealth builder, about not searching for trades, allowing the trades to come to you.
Practicing your wealth building and trading being an activity in your wealth building, in a way that minimises your potential or projecting your beliefs onto the chart.
It’s like you got to simultaneously assimilate the information, all the information from the chart as soon as possible.
So the more time you’re looking and studying, and checking and measuring confluences using different indicators in a chart, to see if I would fit your strategy.
You are essentially curve fitting.
Typically when we talk about curve fitting, it refers to the parameters on which fully automated expert advisers or robots are created on.
So in other words, when you create an EA or create a robot, one of the ways of testing it is through MT4 strategy tester. And a lot of the EAs that get sold online actually will show you the results from an MT4 strategy tester.
Jeez my goodness, did I find out how wrong that is.
Strategy Tester is a wonderful tool if you’re testing a strategy that you’ve been able to code to see if it executes trades when you want it to execute.
But if you’re trying to code it from the point of view of setting parameters within that strategy to execute the trades going forward, based on parameters you’re checking on data going back, you’re destined to be doomed.
Because 99.999% of those EAs that you see online that have been sold have been curve fitted to ensure that past data is optimised.
The past trades executed on that EA are optimise for the past data.
So that means that strategy was curve fitted for past data with no cognizance, no consideration and no thought given to how the future will be.
Because you can’t always assume that the future will be exactly the same as the past, and that is why testing for new strategies is an art and a science.
It’s not something you just fiddle around with a few parameters and view indicators, and back test on a linear basis, and assume that it’s going to be the same going forward.
It doesn’t work like that.
There’s a whole series of in and out of sample data that’s needed to be considered, and the way in which you do that needs to be considered.
How you take that data, how you randomise that data, and the probability and statistical formulas that you use in order to assess the forward behaviour of price action.
When you compare it over the past 20 odd years, it’s quite a complex art and science. Anything other than that, you are literally curve fitting the EA, the parameters in the EA, for past data.
That’s what we mean by curve fitting in trading.
If you’re using our semi-automated strategies like POGO or BUGSY, which involves some level of automation, where you as the trader decide what you’re trading. They are based on trading the four hour executing on the 30 minutes or 15 minutes. Or if your 100% manually trading you need to be mindful no matter what it is, how you are trading, that you’re not trying to curve it.
That is the issue that costs a lot of losses for a lot of people.
So that actually costs a lot for people.
Okay, and that is because they don’t ask themselves this one question.
It’s very simple and if you make it a habit, you will find that you won’t try and curve fit your strategy as much as you probably do already.
So simple as this.
First thing you ask is when you’re opening a chart,
What is the market type?
Is it bullish, bearish, or ranging? If it’s bullish or bearish is it trending?
If your strategy is for trend, great. If it’s trending fine, but if it’s ranging or any hint of ranging and you’ve got a trend based strategy, walk away, just walk away.
In my experience, I would say that so many of the losing trades that traders take is as a result of curve fitting.
I would say at least 50% of the trades, of the mistakes that traders make are the result of curve fitting.
You’re not viewing the chart as it is.
You’re not simultaneously assimilating the information the chart’s telling you.
You are projecting your own beliefs, you are trying to seek out trades.
You’re trying to find places and reasons to place your trade or your strategy on the chart.
All of those actual acts of trading that are essentially mistakes, are driven by the mindset.
So within the Tribe of Traders, we have a philosophy around the 80/20 rule of trading. 80% of trading is mindset, 20% of trading is the actual tactile side of actual trading.
But a lot of that 20 in fact, 99% of that 20 is actually driven mindset. So where is the line between mindset and trading?
All our behaviour is driven by mindset, isn’t it?
If you’re trying to curve fit, if you’re trying to put a trending strategy onto a ranging market, you’re not asking the right question.
You’re not simultaneously assimilating the information from the chart.
You’re projecting your beliefs onto the chart, and you’ve not got mastery of the 80, because all of that is being driven by your own beliefs, by your own mindset.
Fear of missing out or hope trading…..
‘Maybe this one will work’.
‘I need to catch up’.
‘I need to make up for that draw down’.
‘I need to make up for the loss yesterday’.
‘Month’s coming to an end, I need to get some percentage gains’.
‘I need to make some money in trading’.
‘I’m not a failure’.
‘I can do this.’
All that noise that goes on in your head, is what’s driving your mindset and that is what’s going to be driving the mistakes that you make.
So in a very roundabout way, I’m coming back to what I actually wanted to talk about today, which was TRACKING.
That is something that, over 99% of traders don’t do.
How do you know what you’re doing, what mistakes are making?
How do you know to pinpoint exactly where you’re going wrong in your trading if you do not track?
Because here’s what happens is people have, and I really do sincerely hope and if you don’t, I strongly suggest you do, have a process that allows you to get trade ready.
So get trade ready is the first step.
You’ll get trade ready and then you start trading, and then you’re going through the charts, doing your watch lists, look at what you’re trading and decide the strategy you’re using, and then execute some trades.
But that’s all great and wonderful.
You may have a series of events or process for that.
But what happens at the end of the day, 99.9% of people will look at the results. Oh bummer, it lost. Or, Oh yay, it won. Whichever the situation is okay, and that will be the extent of it.
The end of the month will come and I don’t know anything between five and 15, or heaven help us I’ve seen 40 trades have been executed during the course of that month. But so few traders will go back and analyse every single one of those trades. Worse still, they won’t go back and analyse that, and part of that reason why is because they won’t be able to go back because they haven’t documented.
They haven’t documented their reasoning for going in, their thought process, their feelings, their emotion, their state. None of that has been documented.
So how on earth are you going to know what to tweak if you haven’t tracked and reviewed in order to make next month grow on this month?
Do you remember Einstein … I love old Einstein, Einstein’s saying that doing the same thing over and over again is a sure sign of madness.
Sorry, let me quote it correctly. Doing the same thing over and over again and expecting a different outcome is sure sign of madness.
You’re not going to get a different outcome if you do not track and analyse and review.
So you won’t know what to tweak because 99% of the times if you do that, you will see a pattern.
You will see a pattern emerge.
You will see how and why you’re making the mistakes.
Again, this goes back to something I spoke about I think last week about. I have seen this over and over again that it gives me a knot in my stomach, That so many traders would have positive months if they just eliminated their mistakes.
There’s this horrific statistic, it’s absolutely horrific.
About 90% lose 90% in 90 days.
I don’t know if that’s an exact figure, I think it’s a nice cliché thing. I don’t know if it’s exact.
But I do know this, that 99% of traders that joined the Tribe Of Traders have been training for awhile and struggling, and stopped struggling when they join us.
They’re struggling because there’s some basic fundamentals that are being overlooked, and if I analyse the trades that traders took when they come and join us, I can see that so many of their trades are mistakes.
I would say 60 to 70% of the trades taken are mistakes.
Eliminate those mistakes.
What have you left?
You’ve got valid setups, valid trades.
Of that, the chances are yeah sure, perfect setups, no mistake trades do lose. That’s the fact, right?
But the chances are if you’ve got a winning strategy, mindset right, you’ve eliminated mistakes, you’re going to be more up than you are down.
Take away the mistakes, these traders would be up more often than they are down.
But introduce mistakes and it’s losing month after losing month after losing month after losing month, and on and on and on.
There’s no need for it.
Eliminate the mistakes and you’ll be amazed at how much you will progress in your training, and how many months you will have profitable months.
Whether they quite reach your target or not is a different story.
At least start getting profitable.
Get 1%, 2%, 4%. That’s a better alternative to being down. I can tell you that eliminate mistakes and you’ll find that you will get there.
Research shows that in trading we make about 30% of our trades are mistakes.
That’s what research generally shows.
If you haven’t got watertight trading rules, training plan that covers all eventualities, I’m going to put it to you that every single one of your trades then is a mistake.
You don’t know what trades you are taking that are mistakes, you will not be able to take out or identify patterns in your mistakes, in your trading unless you track it, review it and then implement ways in which you can tweak it.
I teach all of this inside the Tribe of Traders based on a simple model. That’s the GENIUS TRADING MODEL.
The GENIUS TRADING MODEL encompasses –
Trading as a business,
Being a money manager and
Mastering one strategy on time.
And each one of those components is broken down into subsections, and you model that methodically in your trading.
And be consistent, and have a trading plan molded around that.
You’re setting yourself up for success.
You can’t not be successful.
I’ve seen it too often, the guys that come into the Tribe of Traders and they are diligent about it.
Diligent about their rules, diligent about managing mindset, diligent about opening a line of inquiry when and if they make mistakes. Making the hard decisions.
This morning we had one of our relatively new Tribe members, an amazing woman, , she is going to crush it.
Her name’s Patricia. Unbelievable.
She is going to absolutely crush it.
I’ve seen it every week since she joined us.
She is diligent.
She’s up 1.8% this week, last week up 2%, week before that 3%.
No matter where she is in the week, it could be a Monday, it could be a Wednesday, a Thursday. It doesn’t matter. She’ll say, ‘Right, I’m stopping’
She understands that taking small little bites from the market consistently over time is what’s going to give her her target in five years.
She doesn’t have that fear of missing out.
She doesn’t have concept that she needs to make hay when the sun shines.
If you feel like that with trading, you have a mindset issue, sort it out.
I’ve seen it so often, that embrace the 80/20 rule of trading, embrace modelling your trading on the genius trading model.
Trade as a business. You’re a money manager first, and you master one strategy.
And all the nuances in there, you are going to be eliminating your mistakes, and you’re going to be growing as a person and evolving as a trader, and making incredible quantum leaps in your wealth building.
If you feel you know other traders that you feel could benefit from this, please share it with them.
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