Live Trader Coaching Video!
“Never use a random technical tool or indicator to justify a wrongly reactive emotional reason to get in or out of a trade”
In this short video we run through a live scenario where one of our new students Alina places a great first trade on the FTSE, yet then is emotionally influenced by the first trades winning result and then jumps into another one very quickly. She then tries to justify this decision by using a random technical analysis tool that is very importantly not related to her specific trading strategy or plan. This is where mine and the TSC team’s trader coaching comes in as I help coach her through some of the things she needs to think about.
Alina is doing brilliantly! She is hungry, focused, very switched on and is picking things up extremely well and it’s still very early days for her! She is very wisely using her time in the our Live Online Trading Room to share the trades she is placing whilst taking on board the feedback and make the most of the live trader coaching opportunities. It’s natural and normal in the early days to make mistakes and be influenced emotionally by your trade results whether they win or lose. In most cases the new trader makes the mistake of being emotionally driven by the result of each trade they have, rather like a gambler in a Casino who is on either on a winning or losing streak. Do you ever see the Casino getting emotional involved?
I often get asked what things can you do to help not get so emotionally involved in your trades, so here are some things that have helped myself and the Traders Support Club students.
Get a Good Trading Coach – Very often, as in Alina’s case, you don’t even know you have been reacting emotionally or breaking your strategy rules until during the process of trader coaching the right questions are asked and in a live environment.
Really believe that trader coaching will help – Sounds strange but you have to want, believe and value what your coach is telling you even if it initially feels counter intuitive or that they are unfairly pissing on your recent winning trades parade!
Be strong enough to take the feedback, questioning and criticism. This will help thicken your skin which is a much needed attribute in trading.
Focus On Being Process Driven – The result of each individual trade actually is not important, it’s the result of the 50 and 100 trades you place and making sure you stick to your process for each of those. Ask yourself “Have I stuck to my rules on this trade?” and initially mark your success by this!
Don’t set yourself strict weekly or monthly points or % ROI targets – This is a form of being too results driven. It’s much better to work to benchmarks and loose targets because very simply you could have done everything right but the markets and your strategy are not delivering on that day, week or month. Also if you set yourself a target of 10% that month you can easily end up taking a poor trade set up, when you are at 9.2% ROI with one day of the month left to go, because your simply being to results focused. The trade wins and you wrongly think you did the right thing and go off and celebrate under a false pretense about how your month has finished off! Or the trade loses you are now at 8.2% ROI for the month and you now feel you are running out of time and either wrongly start hunting down more poor trades or going into the end of the month feeling regretful about being greedy.
Make sure you have a big enough emotional reason “Why” you are trading – This needs to be bigger and more important than simply winning or losing on that individual trade.
Have Your Trading Strategy & Trade Execution Process written down – This is vital int he early days until your strategy and process become habitual and even better have a trading coach check through it. Make it easy to follow and as visual as possible. Scroll the charts back and practice this on previous trades so your tune your mind in on what to focus on.
Get live and Trade Live – As you will only really know how you react once you are in that position, just as Alina did.
Alina’s is doing all of the above and more and is why she is progressing so well and this was her response to the live trader coaching session…..
“Thank you Ali Crooks! On that day after talking with you everything become so clear. I was literally lying myself that there is a consolidation or that the market might go down. You can never predict the market and once again it has been proven to me.
Thank you again for the AHA moment!”
Trade safe and take the time to step back from the result, focus on your process and execute your trades well.
Ali
Comments 2
I am not sure what Ali means by justifying a ‘random technical occurance’ to take a trade. In the video I cannot see what RTO occured that he is referring to. Sorry but it just didn’t hit home with me! What was the mistake the trader actually made other than getting into a new trade far too quickly after just winning a trade? If there are still sufficient reasons to get back into a trade then why wait! This is unclear to a rookie like me!
Author
Hey Vincent, As you know from seeing me at the three day event and learning from the myself and the team, we teach traders to only enter and exit trades that meet a very specific set their strategy criteria. Lets look at this in two parts. Firstly, up to entering the trade – Very simply the second trade Alina took didn’t meet her specific set of entry criteria. However she “thought” it had which was the first issue. Secondly, exiting the trade early – Then Alina chose to exit the second trade, not because she realised she had not stuck to her entry criteria for the second trade, but because she saw something randomly occur once in the trade (she saw a bearish engulfing downside candle). So in essence she broke her rules twice, she broke her entry rules by entering the second trades, despite it not meeting her criteria, and she broke her exit rules by exiting the second trade not because it hit her intended stop or target but because she saw some random technical occurrence ( bearish engulfing candle). So both decisions (entry and exit) were not part of her plan. Now by getting out because of that random bearish engulfing candle you could argue that because of that reason she got her self out of her bad entry trade that she should have never been in and thus saved herself the loss of that trade. But as her coach I don’t see that way because I am not concerned about the result of each trade, I am concerned with whether she sticks to her rules or not. I then showed her my trade from the day before where that same engulfing candle scenario (not part of my exit rules) occurred midway through my trade and I did not react to it. Because long term that is what is going to to bring you success in trading. The video highlights the fact that often day traders are most vulnerable straight after a winning or losing trade and in Alina’s scenario that’s exactly the case. Her fist trade was perfect (not by result but by execution – the result just happened to be a win) but knowing the strategy she trades I could see straight away that her criteria had not been fully met on the second trade. Now she may have known that on a sub conscious level and that was why she chose to use the random technical occurrence of the bearish engulfing candle to get out, but two wrongs don’t make a right from a trade execution point of view. Hence Alina’s comments afterwards about her realising she had lied to herself. Now the reason the video may not have hit home for you could be because you may not be clear on her strategy, and newer traders (as was Alina) can be too focused on the logical idea of the result rather than the execution, hence you saying “If there are still sufficient reasons to get back into a trade then why wait”. Also you may not be a trading with clear strategic criteria, or you may intend to be but then the markets temp you in or the previous trade result tempts you back in. I would only know that if I was coaching you! Also you may use technical analysis to choose your trades but use different technical analysis critieria and rules each time. The problem with this is you can become very reactionary and not quantifying your success and failure going forward. The first key learning for you to take away is there maybe sufficient reasons to get back in to the market but they were not sufficient reasons for Alina to get back in because her specific criteria were not met. The second would be the points I made in the text below the video (more important than the video itself) and work on some, or all of those over coming weeks and months to improve your own trading. Most importantly, get a trading coach to check that you are not lying to yourself.