Wednesday, 19 October 2011

How Do You Eat An Elephant?

The answer is, as the saying goes, "One bite at a time".

Some traders have problems reaching CP because they go too fast. If you go back two years to the first posts to this blog, you'll read that the basis of what I taught Kiki was to go slow. We created a series of building blocks in the TPs so that she could progress slowly, building on past success as she progressed.

This iterative progress is an important tool in reaching CP. By nature, we traders are very impatient. We want it now! That works against us in the long term. Our motto is "when all else fails, read the instructions". It doesn't seem to work like that in trading. A trading plan (TP) needs to be built from the ground up. In different steps as the trader perfects different aspects of it and gets the belief to have the discipline to trade it.

Having said that, the goals need to be very specific and measurable, and above all, be realistic.

BTW, those of you who are still thinking about attending the November Workshop, you'll need to make a decision by the end of the week if you are new to EL, as we need time to courier you the EL Theory DVD Set so you can bring yourself up to speed before the Workshop.

The workshop will be working on two main trading pictures that the attendees will be tailoring to their own needs. One is an inside out and the other is outside in. Each attendee will end up with a set of trading logic and trading plan that has back tested as profitable. We will be working together on the rules to put into place with the aim of keeping the TP profitable. Of course part of the responsibility of the trader is compliance with the TP. The best motivation for this is success with the TP and that is why I advocate trading in SIM until the TP has proved itself to you. The stats below is for an almost 5 month period using a 6 tick range bar and 1 lot for the ES. It's a very specific TP and achieves great results. This is a TP that I scale for as many contracts as I want because of the depth of the ES market.

A TP can be tailored for a very specific picture during a very specific time of day.

None of the above is new. This blog has the same sentiments in it over and over again, perhaps in different words. But the problems traders have that they email me about are mostly the results of not doing what I've written above. Putting all your smarts into your TP is the road map to CP. Executing in compliance with that TP is the engine to CP.


  1. There can be drawn a loose analogy between trends and training. The development of skills, at least if you intend to reach expert level, looks very similar to an uptrend. It is jagged and full of plateaus where previous information is considered and absorbed. Just as people have difficulty staying in trends when it moves partially against them or stalls, it is also difficult when you are your own mentor to not lose hope when you seem to moving backward or staying neutral. But it is the larger picture that matters. If on the weekly, the monthly trend you are improving, and you are managing your losses so that you stay in the business, then you are on the path to success trading.

  2. Do you include commission/slippage costs in your Tradestation Performance Reports? Also was wondering if you go over any of these 'test' strategies or provide code? Just curious what the logic was behind it? You have a very interesting site and looking forward to going through it.

  3. NN, I use a larger than real commission, no slippage as I enter and exit on limit orders. The extra I add onto the commish covers any slippage that creeps in. Price has to go through my exits by at least a tick too.

  4. Excellent, ty for the clarification!!