Tonys Story Part 4

Tonys Story Part 4

…continued from Tonys Story Part 3


So in the previous sessions on the topic of my trading history, I discussed how I got into trading and how, after 7 years of failure, I was no better trader than I was on the very first day. And I had decided that money was at the core of my problems, which led me to other epiphanies about myself and my trading problems.

After a weekend of having multiple Ah Ha’s, Monday rolls around and I’m ready to go… sort of. I had some epiphanies to be sure. But I’d not quite figured out what to do about them. I knew that money was my emotional enemy and that I needed to try to approach trading like it was a job. That’s as far as I got, but for me, that was a huge step. Huge mostly in hindsight. At the time, I really didn’t have any expectations that this was going to be any more successful than all the other things I tried. But it was something anyway.

A little side note here: When I was “working” on my trading over the previous 7 years, that mostly consisted of trying to find a regular edge in the markets to exploit. It meant spending countless hours trying new technical indicators, mindlessly scrolling through historical static charts,  going to webinars, buying trading systems that I didn’t understand, watching hours and hours of YouTube videos, and signing up for and posting on every forum or social media trading group I could find. Very little, if any, time was devoted to trying to fix ME. The only thing that I ever read was that I needed to trade without emotions and trade like a machine. When I continued to fail at this, I simply refocused on the mechanical aspects of trading, you know, that actual placing, managing, and exiting trades, since that seemed to be the most obvious place to focus.

To do this “experiment” it seemed to me I needed a few more things.

  • I needed a simple trading system with simple rules that required only yes/no answers for qualifying a trade setup
  • I needed to remove money from my front of mind.
  • I needed a way to practice away from market hours. Preferably in the evenings.

There are innumerable trading systems out there with infinite ways to make them complicated. I was a pro at making simple things complicated as it related to trading. I decided to find the most simple trading style I could and really focus on it. At that time, it was simple Support and Resistance trades that happened at the most common areas of support and resistance… Floor Trader Pivots. If I learned nothing specific enough about trading to be consistent, I did learn that price WILL react to support and resistance lines. Sometimes in a very predictable way. That trading system, with a few rules, was the system I was going to use for this experiment. Nothing else.

The next thing, removing money, was going to take some brain training. When everything in trading was about money, how was I going to remove it from my thoughts while trading? This was where I was sure this experiment was going to fail for sure. But, I had to try. So I decided to start by removing money everywhere I could…

On my trading platform I turned off the PnL. I made sure I could not see anything that related to how I was doing for the day. Was I in the red? Was I in the green? It didn’t matter. I just had to manage my trades according to the very simple rules I set up.

Orders and executions were intentionally hidden so I couldn’t peek at them. Daily broker statements were not reviewed daily. They all went into a folder that got reviewed, at the time, weekly. And they were reviewed over the weekend, NOT during trading hours. My record keeping was for wins and losses only. And I only kept up with wins and losses, so I’d know when to quit trading because I’d hit my daily target whether it was my profit target or loss stop. Of course, ONLY wins and losses based on the trade plan and trading rules counted. If the trade was managed to its logical conclusion based on the plan, it counted. I’ll talk more about the specifics of the plan I was using in another video.

I felt that removing money from trading was going to be helpful if I could do it, but I also knew it was going to take time and a lot of effort. I had no idea how much time or effort it was going to take. But I still had emotion issues that needed to be dealt with. So, what could I do? How can I remove or reduce the amount of emotions I had while trading? Well, I decided that the less time I was in a trade, the less likely I was to be emotional. What if I only took very fast trades that got me in and out of the markets very quickly. Wouldn’t that greatly reduce the need for me to manage my emotions? So, for the experiment, I was only looking for a few ticks before exiting a trade. If I could consistently win only a few ticks, then I had some consistent success to build on later. I was not trying to build a trading career with this experiment. I was just trying to see if I could consistently win SOMETHING each day, even if it was only one or two ticks of price movement. If I could do that, then not only have I proven I can be a winning trader, but that I finished ahead of most other traders that traded that day.

Everything was falling into place until I got to the practice part. I knew that everything I had ever gotten good at in my life required practice. And I also knew that what I had been calling practice… sitting and staring at trading charts during live trading just waiting for a trade setup… was not REALLY practicing. SIM or Paper trading during live markets is NOT PRACTICE. Practice is repetition. Practice is doing something so much and so often that you become unconsciously competent at this thing. Take driving for example. You don’t get a lot of practice sitting in the passenger seat watching with only the occasional chance to park the car or drive across a parking lot. You get practice driving by doing it as much as you can. With enough experience, you can drive without even thinking about what you’re doing. You’ve become unconsciously competent. Trading needs to become that way.

Coincidentally and about this same time, I found the NinjaTrader trading platform. I don’t really remember why I was looking at it but I do remember specifically the moment I found the Market Replay utility. This utility allows traders to download tick by tick market data to their trading platform, and then replay it at a later time. The replay will populate the entire NinjaTrader platform so that practicing with replay data is indistinguishable to practicing with live data. The key is, you can move the time to whatever time you want to. If I want to practice a trade setup that happened at 12:05 pm 10 times, I just need to back up the replay data each time and replay it. In the same amount of time I’d sit watching live market data in order to sim trade one or two setups, I could now practice dozens of trade setups. I could study and practice my support and resistance trades over and over again until they became automatic.

I had no idea something like Market Replay existed. But the final experiment puzzle piece snapped into place relatively quickly and I was ready to get started on the experiment.

As a reminder. The experiment consisted of…

  • Removing Money from Trading
  • Trade like it was my job. I had a boss to be accountable to.
  • Trade a simple system with simple rules with Yes/No decision making.
    • A Note Here… Not just a simple system, but the removal of ALL OTHER information was required. I went from 12 monitors to 2. If it wasn’t specifically required for making a yes or no decision, I got rid of it.
  • A structured daily training program. Not just to train me to execute trades, but train me to think differently in the process.
  • Trade quickly for just a few ticks to reduce the need for emotion management. This way I could prove to myself I COULD be a winning trader and I now had something on which to build a trading career.

And we’ll talk about the results of this experiment in Tonys Story Part 5.

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