November - Putting it all Together Continued
Action
The first step to taking timely and appropriate action results from knowing that you know. By this I mean, what âsufficient data setâ provides the signal required for a trader to know the time has come to act. For some, âtake actionâ means immediate clicking of the sell button as Price exists the RTL on increasing volume while trading long. For others, Action results when Price heads higher on decreasing Volume. While the sufficient data set required for âtake actionâ differs greatly among each trader and on each resolution level, one thing remains fundamental to the process: Everyone must have rock solid understanding of the fundamentals involved with the methodology in order to effectively (and immediately) take action when the data indicates.
Failure to take timely and appropriate action often results when a trader allows emotional baggage from the past to override their common sense. Fear or Greed become powerful adversaries when the traderâs psychological state opens the door. Without rock solid fundamentals no amount of âwillingâ or âhopingâ for the next step in the process ever works. By having full and complete confidence in the methods after weeks and months (sometimes years) of correct annotation, analysis and decision making the ease in which the trader then takes action becomes perfectly clear. Self-doubt, uncertainty, guessing and the big ones fear and greed â each fall by the wayside.
Think back to the beginning of this Journal when many here chose to Sim Trade (or even Live Trade) against all advice at the time. Some felt âreadyâ to take on the market, when in reality, they had not yet developed the skills needed. Clearly, many then realized how jumping ahead before fully ready hurt their development (and some even posted this same observation). What these traders lacked at the time, was a rock solid foundation of the methodology. A foundation which at any instant, in any market environment, allows the trader to know two things: when he / she anticipated correctly, and when he / she did not. Secondarily, this rock solid foundation then permits the trader to immediately take action to fix that which resulted from error. One simply cannot hope to survive, let alone profit, in an environment where oneâs adversaries come to the arena fully prepared â unless the trader does the same.
So how do we go about shortening the time for each step above and thereby give ourselves the greatest opportunity for success?
We begin by first looking for, and then correctly identifying, the areas which need attention. By this I mean to say, statements such as, âIâm confusedâ provide no guidance as to where one might search for enlightenment. Contrast the previous statement with, âHow can I avoid entering on a retrace of a retrace?â and now you have an exact recipe for producing successful improvement of your trading.
Nwbprop used to say that his favorite time of the day was the âdebriefâ because he often learned so much during this time. Hopefully, the lessons he learned and articulated have helped others do the very same thing â debrief daily (even several times a day if need be). After all, once one can correctly identify a problem area, one can then set out to locate a solution. More often than not, youâll find the solution between your ears.
So we begin this self-analysis process just as we begin any journey â at the beginning â checking to see if we annotate correctly, efficiently and fully. If we do not correctly annotate, then we must begin to make changes in order to correctly build the pathways needed within our brains to âseeâ the signals provided by the market. Once the required annotations have taken place (and an appropriate time has passed allowing the brain to actually build the pathways, and not the traders setting some arbitrary deadline), we move onto the analysis phase. Here we check to make absolutely sure we know how to read the basics. Do we understand how Gaussians lead Price? Do we know consistently what must come next? Can we âseeâ (on our specific resolution level) where we are always with respect to the right side of the market? If not, then we need to go and review.
The Journal is set up for review multiple times. Each pass, something which once made little sense, or appeared to come across with one meaning may appear different another time through. Why? The context has changed, and as I always say, when the context changes the answer changes. This time the change in context resulted from a change in the trader. As a result, the trader sees things differently than before, and hopefully, this difference results in an âAha!!â or two along the way.
Once we have answers to our questions, and the number of questions begins to decrease on a regular basis, the time has come to move to the next phase of the process.
Once everyone begins to think along the lines of continuation or change, youâll notice something quite remarkable. Youâll actually begin to âseeâ the change forming before you note the FTT. Why? Because youâll expect it, in advance, right at the point in time specified. Many of you already have this ability without even realizing it. Its just that the subconscious part of your brain hasnât let the rest of your brain in on the secret just yet. Therefore, to improve oneâs decision making, we need to make absolutely sure we understand the definitions of each based on our specific resolution level. Remember, we do not need to take action until Price has crossed our lines in the sand. No rush. No panic. No fear. What is more, we must learn to anticipate the possibilities which exist at the beginning of each bar, and then, learn to mentally eliminate each possibility as time passes. In such a fashion, the trader learns to mentally walk through each bar and arrive at the âat some pointâ moment where decisions occur. Arriving early results in over trading, arriving late cuts into profits. As such, mentally walking through each bar (as a drill) teaches us what must come next.
Once we have placed the entire set of dominos upright, all that remains is to knock them down. In other words, we take immediate and appropriate action. If we have correctly followed the steps above, then we should have no worries at this step. However, if we allow the emotional baggage of the past to enter into the M-A-D-A process, then we need to focus on discipline. Mentally learning to build walls around these memories of poor performance is a top priority. Never focusing on oneâs P & L during the trading day (in fact, donât even bring it up on your screens) helps this process immensely. The market does not know when someone entered or exited, and it certainly doesnât care about what you need Price to do, so why should you?
The market does its job â provides signals â and the trader does their job â push buttons. No need to do the marketâs job, because the market has no plans to do yours.
A few may find my words not specific enough for their needs, or some may feel no need exists to follow the path described above. I cannot answer such thinking because I am not in the mind of the individual. The decision to focus on areas which need improvement remains a matter of personal choice. One need only have an honest conversation with themselves in order to easily determine the next step in the learning process. Hopefully, the oneâs who need the advice the most recognized themselves in the many examples, and by doing so, they can find the motivation they need to push forward.
The bottom line with this wordy post is this: Learn to know what specifically provides a challenge, and then, one can seek the specific plan need to eliminate the obstacle in your path. âI canât draw channelsâ requires a completely different focus than, âI canât seem to hold through the retraces.â By learning to focus on the obstacles, as well as, celebrating the small success along the way, eventually everyone can learn to build upon the lessons of the past. And really, thatâs what this near year long journey has been all about.
Good trading to you all.
- Spydertrader
