Yesterday I wrote about the #1 trading frustration of top traders on our prop desk.
Today let’s offer 3 ideas to solve this frustration:
1. Journal your progress on waiting for setups. When are you successful waiting for setups? When are you early to enter and why? Patterns will emerge, when you are tracking this specific goal. A better understanding from tracked data on this issue will help you improve.
For example, many traders are too aggressive trading on Mondays. They are so hyped up to show the market how they will improve on Monday that they force trades. Seems silly. But this is what the data shows. After gathering, now many traders know to watch for forced trades on Monday. They know they need to prepare to calm down and wait better on Mondays.
2. Develop your PlayBook. Archive the variables of your best trades. Review these trades. This helps you internalize your favorite setups so you can just execute in real-time. You now know exactly what comprises your best trading with a PlayBook.
When you understand exactly what makes up your best trades, it is easier in real-time to wait for the entry. In real-time when you recognize a few variables are missing because of the work you have done outside of market hours identifying your best trades, it will be easier to wait.
“No the trade is not quite here yet,” you will self-talk.
Your gains come from executing on your PlayBook. They do not come from pulling the trigger on trades missing variables from your PlayBook.
3. Talk to other traders. Friday I noticed a Junior Trader near tilt. I asked him if he wanted to join me for a walk to grab a drink. During our walk, we started talking about a trade I had muffed. And a stock that was getting him to talk under his breath in frustration. During our walk, the Junior Trader identified a pre-market resistance level in OPK that I had undervalued. It helps to talk things out and hear the perspective of others so you capture the essential facts of trades.
Reviewing trades just from your perspective may be insufficient, particularly for active traders. If you journal incomplete trade descriptions, then your reviews will not be impactful for improvement.
Our goal in 2017 should not be to completely eliminate entering early. Trading is a game where we will always make mistakes. But if we can make these mistakes less often, and if we can cut them faster in real-time, we can make real progress.
The key is to do the work above, stick with it, and give improvement time. How much better can you improve waiting for setups in Q1? Not how much better can you get at improving waiting for setups the first week in January. The elite traders track the former.
Happy New Year!
*no relevant positions