It seems the many countless hours I have spent in conversations with several trading buddies, with the discretionary trader here at the hedge fund, and sharing offices with several full-time retail traders over the years have turned me into a bit of a trading therapist and actually put me in a relatively good spot for helping other traders with various aspects of their trading, such as money & risk management, understanding of probability, routines and processes and strategy development.
Thus on Saturday, I spent two hours with someone who has been urging me to give him some coaching on the trading front. Despite having difficulty generating consistent profits, I was able to share a good amount of valuable and useful knowledge with him.
Here’s the outline of what I discussed this with him – came up with this after thinking hard about what i consider are the cornerstones of becoming and being a successful trader. Thought this might be of interest to other traders and people considering getting into trading.
What is the aspiring Trader’s trading experience?
- Chronological review of trading activities – identify the main chapters
- Idea of time spent – length of trading phases, full-time/part-time
- Idea of executed trades – frequency, timeframes, approach
- What were main breakthroughs/signs of progress?
- What was motivation to start trading – and what is the motivation today?
Forex Trading Strategy
- What market(s) do you trade?
- Do you trade them with a specific trading strategy (or strategies)?
- To what degree is the strategy documented?
- Setup parameters
- Entry, exit and trade management rules
- Examples of executed trades
- Has the strategy been tested?
Forex Trading Processes & Routines
- Pre-Session checklist (physical and mental) https://trick-or-trade.com/2016/09/05/pre-market-trader-assessmentreadiness-matrix/
- Eating, Drinking, Sleeping, Exercise
- Impact varies depending on type of trading
- Check-lists for various aspects
- Trade Documentation
- End of Day session Reviews
- Psychological Reviews
- Trade Diary/journal/blog
- Blog Post detailing my processes of typical trading session
Forex Trading Operations
- Progress as a trader – how should this be measured?
- Hours invested in trading – targeted learning – look for good yield on time invested
- Monitoring charts and actual trading
- Documentation of trades and market situations
- Review of documentation
- Studying new technical material (books, webinars, webpages, forums, seminars) – technical areas, processes, psychology
- Strategy development & testing
- Practice – simulated trading such as ForexTester
- Coaching & Mentoring
- Charting Packages, news feed
Risk/money management/understanding of probability
- Understanding of transaction costs https://trick-or-trade.com/2015/06/22/226-trading-results-graph-a-word-on-transaction-costs/
- Trading Frequency, win rate, RR ratios
- Expectancy Model & expected variance
- Trading Capital – many trading related costs are fixed e.g. cost of PC, seminars, books, subscriptions, coaching – the costs decrease relatively depending on trading capital size
- What are examples of trading psychology issues?
- What are the root causes of these issues & how can they be avoided?
- At what stage of one’s trading career does psychology become important in trading?
- Does psychology impact depend on the type of trader?
- Discretionary with no rules whatsoever – trades by the gut
- Discretionary execution with well-defined rules
- Following a lead trader in a live trading room
- Automated execution – near 100% systematic trading
In my view, this shows that there are many areas to work in becoming a successful trader. Many of the above points and topics are discussed throughout this blog – use the keyword search and category search to start looking.
Questions and discussions welcome. Happy reading & good luck!