Day Trading & Forex Forum

CJIA

Good Article on the journey to be a Trader.
Best Professional Practice: Part 1
Introduction
Why don’t most win at trading when they know what’s required: cut losses and let profits run?
It seems simple but only relatively few who commence the trading project go on to become
consistently profitable. Why is that the case?
There can be reasons for the lack of success which can be rationalised. The ‘trader’ could
approach the market as a hobby, as fun and as a diversion from other life issues. Watching a
market is inherently interesting and an occasional dabble seems ok. Winning is not as important
as involvement.
However, although few traders do consciously set out to lose, most do lose or fail to win
consistently. There is a real discrepancy here. This occurs despite the huge industry in trader
education, trading software, and cheap brokerage in internet trading platforms and so on.
What’s missing? Why can’t people cut losers and work winners? The statement of this simple
proposition belies the psychological, intellectual and activity demands required for success. The
answer is that to be successful the trader must engage with the imperative and processes of
best professional practice. In this chapter we will cover the psychological foundation of and
elaborate on best professional practice for trading success.
The market is reality
Markets tell the truth. If you are dealing on a public exchange then each trade, each and every
deal between buyer and seller is recorded and won’t be changed. You always know the score in
one of the most open and transparent of businesses. Real and precise information is at your
fingertips so that you can assess risk and the efficacy of your current position. (This is not
necessarily true for Over The Counter products as we have witnessed in the sub prime crisis).
Agree with the market and it will pay you. Disagree, you pay. If you are not winning then must
be disagreeing with or ignoring reality: to win you have to learn how to respond to and deal
with reality. Sounds simple and it is. But it is not nearly as easy as it sounds. Knowing the reality
that a jumbo jet will lift when the speed of the air over the wing reaches a threshold does not
make you a pilot.

In life we have to face another huge existential reality that our animal bodies are going to die
one day, and furthermore that life can present terrible arbitrariness and calamity. As our
consciousness develops in early childhood this reality is dealt with by repressing it. We develop
character attributes that reflect a refuge of denial from harsh reality. These attributes are
essentially personal illusions or lies that help us cope. This is an essential coping strategy for a
child. But in adult life we can easily become embedded in our general culture that reflects our
immature yet comfortable illusions that are predicated on the limitations of fear and denial. Yet
this response both personally and culturally is essentially neurotic although appears to be
‘normal’.
When perturbed by life’s issues we have two choices. New information can either be
incorporated enabling us to change and grow from our former limiting beliefs (i.e. accept the
challenge) or be denied to consolidate our prejudices (i.e. stay as we are). The choice is stark.
The cultural norm is one of hopeless defeat by the fact that we are indeed limited by bodies
that will wind down and die. The alternative and better choice is to accept the limitations that
our bodies and life imposes upon us and to experience the challenge and liberation of
extending ourselves and really going for it.
If we choose to trade then we are choosing to interface with one form of reality, market reality,
which is much bigger and more powerful than ourselves. This form of reality is always in a state
of flux; it’s dynamic. Yet its acceptance is a must. Our culturally programmed default life coping
mechanism of denials and prejudiced illusions simply won’t suffice. You may be able to live in
your sheltered comfort zone but neurotic fear and denial makes market success impossible.
Narcissistic views that irrespective of the market truth we should automatically win or that we
are entitled to a positive outcome won’t suffice either. In addition, acceptance of market reality
means that we have to relinquish the idea that the market will conform to our own ideas and
views for it.
Again we can convert this into a positive. The fact that markets tell the truth makes the trading
task easier than many other life projects. The market always lets you know the success or
failure of your current trading position each moment in time. Rather than deny this reality the
rational response is to assume responsibility for taking advantage of the truth. In other words
the market tells you when to cut and when to hold irrespective of what you may happen to
think or feel at the time.

We have to overcome our neurotic tendencies and grow if we are to accept and then harness
the market reality. If we don’t accept the reality of the market then we are doomed to failure.
Denial in the market can be catastrophic.
Heroes
A common feature of the human trapped in the cultural norm of denial and mediocrity is the
search for a hero who has been able to shine. It may be a movie star, sportsperson, a politician,
or someone outstanding in one’s area of interest. The idea is that the individual can transfer
their own need for liberation and achievement onto the hero so that he or she can remain
comfortable without threatening their own illusions. Of course if the hero falls then there is
someone to blame and more evidence that indeed becoming outstanding is not worthwhile.
In trading there are plenty of gurus that can conveniently fulfil the role of hero for you.
Nevertheless we have the capacity and power for creativity and self actualisation not only so
that we can deal better with life’s realities but also have successful and purposeful lives. This is
the process of growth or self actualisation that is a requirement for a healthy and a more
satisfying life.
Rather than just going through life we need to engage with our ‘super conscious’ selves. This is
the place in our psyches where we acknowledge and use our latent courage, resourcefulness,
creativity, decisiveness, clarity, and inner wisdom as well the sense of gratitude, love and
altruism. Some psychologists call this the hero’s journey. Without your personal hero’s journey
you are prone just exist, to cave in to ordinariness, to be unfulfilled so that you will realise on
your death bed that you never extended beyond your comfort zone; that you have essentially
blown it. Tragic!
In essence the legitimate task of growth and success is to become your own hero: to have the
courage and self belief to initiate, enjoy and learn from the ups and downs of your own hero’s
journey.
This is what we need to tap into for trading success. To become successful in trading you need
to embark on your own hero’s journey. Of course many people have successfully undertaken
the hero’s journey in the markets. There are plenty of really successful traders around. Some
like to take their success public and even perhaps create courses based on their approach and
understandings.

One thing you have to guard against is that you don’t project onto a market guru in order to
replace your own hero’s journey. It’s a common trap.
When you read books by and pieces about successful market traders a couple of key points
should emerge. Firstly success is doable by ordinary men and women like yourself because they
have chosen to be different from the norm. They exhibit dedication, resilience and disciplined
focus on cutting losers and working winners. Secondly each market wizard has achieved success
in an individual way. They all are indeed different from each other. The pathway to success is
different for each individual. The hero’s journey is unique to each.
Indeed the courses and insights of market gurus are worthwhile. They are very useful success
models to commence your practice. They show you the journey can be done but you have to
derive and apply your own uniqueness. Unfortunately following a guru does not guarantee the
success they achieve as your own. Only you can do that when you employ the template of
cutting losers and working winners and chose to risk the venture of you own journey.

__________________
"Dyfal donc a dyr y garreg." Translation: "Tapping persistently breaks the stone."

CJIA

Best Professional Practice: Part2
A model to create your success
Knowing that your journey is doable because others have done it, do you have to go on it
blindfolded? Certainly not! I would like to share with you a model that I use to help individual
traders become professional and to reach for success.
Here it is in its basic form:
OBSERVE ACT MONITOR EVALUATE
This feedback model is not only useful for traders but also is applicable to many life situations.
You already use it consistently and diligently when you drive your car. It enables you to
continuously drive safely and precisely so that you to get to your destination despite complex
changing conditions relating to the road and traffic. When you drive you are continuously
engage the feedback model instant by instant.
Notice something really important here: you trust yourself to flawlessly and instantaneously do
what the model suggests when you are in command of your car. You take complete
responsibility to engage and adhere to the process when you drive. Because you have practiced
the skills in many situations you implicitly trust your capacity to implement the actions the
model mandates. Denial of information flowing to you via the model could be so disastrous that
you could endanger others and even lose your life.
When you drive your use of the model is unconsciously competent. You are in the zone.
Since you learn to use this model successfully when you drive doesn’t it stand to reason that
you can learn to engage and adhere to the model in the trading environment? It’s a must and
this is where I start to create best professional practice in clients. This is what the market
heroes do.
Now let’s have a closer look at the model as it applies to trading.
A key point I want you to note is that it is a complete feedback loop. Each stage is important.
Furthermore the model is applied consistently and continuously time and again without fail.

Once one feedback loop is over another is ready to commence. Each individual trade is
conducted on its own merits independently of the previous one within the context of the
model. The success or failure of your next trade is physically and psychologically independent of
the past under this model. Too often beginning traders err by acting as if this current trade is a
rerun of the previous one or two. Now this model requires you to focus on what is happening at
this moment just as you do when you drive your car.
One of the biggest ways traders come to grief is that they trade their selves: they narcissistically
trade what they think and feel and what they want rather than the reality of what the market is
presenting to them now. The feedback model allows you to trade the market so that you can be
detached and free to act in line with your objective observations and evaluations. You don’t
have to guess the future; you just have to act appropriately now if your observations and
monitoring tell you to do so. Keep working the model and you will achieve your desired
outcome.
Now let’s turn to the key elements of the model.
Unfortunately there is a misbelief out there that if you dwell on getting the best observations
you will surely win. In other words it is easy to become over reliant on analysis. This is
encouraged I think by non traders who pedal analytical software. However it’s what you do
with your observations that are important to trading success.
The role of observation is to identify points at which risk is worth taking. Unfortunately many
try to analyse risk out of the trade entry. Remember the risk reward relationship: higher risk
equals higher reward. We are looking for quality set ups in the current trend and volatility
conditions that will give the biggest bang for our buck. We are not looking for certainty because
the reward would be inconsequential. We are instead observing those conditions that when
traded upon create a return that covers losing trades together with making the business very
worthwhile. Since 20% of your trades will give 80 % of your profit, the observational task is to
identify for execution that premium 20%.
Some spend so much time on observation that when it’s time to act they can’t do it. They
become immobilised by fear that the trade won’t work or hesitate waiting for more
confirmation. Of course hesitation can only reduce the reward if the trade does go on to be a
winner. On the other hand some are so eager to pull the trigger that they act impulsively rather
than wait patiently for a premium set up to occur. Both hesitation and impulsiveness are the
by‐product of that neurotic denial of market reality I mentioned earlier.
The next stage is to act on the observation.
This is where work for the successful trader begins. Unfortunately for many this is where it
ends. Of course you have to believe your observation has presented a quality entry for you to
act. But there can only be two outcomes. Either the trade will work or it won’t and the model
prepares us for that.
If you observe and act and don’t employ the full model you are gambling. At the track you
select the race horse you like and put your money down. Then there is nothing you have to do.
You just have to accept the result at the conclusion of the race. The full model is not available
to the race track or casino gambler. But a professional trader cannot gamble because the race is
never over in markets. He or she is a risk manager and monitors and evaluates in preparation
for the next action which will inevitably be called for. This is imperative in leveraged markets
whereby unlike the track gambler you could lose much more than your original stake by not
monitoring, evaluating and acting.
Monitoring, that is observing whether your position is advancing or retreating as the market
moves on, and evaluating for your next action, whether it be attacking or defensive, are crucial
elements of the model. When you are in a trade you need to remain responsible for the
outcome. You must maintain vigilance and be prepared to act. You cannot afford to go to sleep
at the wheel.
If the trade begins to fail it will be cut (remember the stop loss idea) and you go on to a fresh
cycle of the model. On the other hand if the trade goes well then the action of holding onto it
and possibly adding to it will be called for (remember the work your winners idea) as long as
your continuous monitoring of the market calls for this. Monitoring and evaluation continues
until the market indicates the move is over. Action: take the profit. And then what happens: the
model kicks in for a new beginning as part of an ongoing process.
So by now you will have concluded the model I have presented here is a Stimulus‐ Response
model as a basis for successful trading. Observation and monitoring gather the stimulus from
the market for the response which is to act according to what is happening in the market. You

have to learn to trust the model by applying it at first consciously and deliberately in controlled
conditions, just like when you learned to drive a car.
Ultimately it is a question of your personal choice to take response‐ability, the ability to
perform a correct response (act) in accord with the truth the market is presenting to you now.
Personality and Aptitude
It goes without saying that each trader has differing perceptions, motivation, personality and
aptitude. This must be the case because when you enter a trade you have to be convinced that
the outcome will be very worthwhile for you. However your counterparty, the person who
takes the opposite side to your trade, will be equally convinced that his or her position is
correct. This is what makes a market: people who so vehemently disagree with other that they
are prepared to back their observation with money.
Now I want to turn to personality and aptitude. I administer Personality and Behavioural
Profiles for traders to identify their strengths and weaknesses so that they can be exploited and
overcome as the case may be. I must warn you however that in the face of the market reality a
strength over used can become a weakness.
I test for the attributes of the four personality need types which the Personality Profile
identifies: Recognition, Social, Security and Achievement. It pins down your Personality
strengths and weaknesses.
Are you overly competitive, impulsive, or timid? Does the long term suit you best, or should you
be a short term trader? Are you independent of or vulnerable to the crowd? If you know
yourself better then we can start you off at the right place and adjust for your vulnerabilities.
While you can’t really change your personality you can certainly change the way you behave.
This is why the Behavioural Profile is most important. We can pin down your current
behavioural responses in trading the market and compare them to the successful market
operators, the market heroes we mentioned previously.
There are a number of ways we can respond to a particular environment. Furthermore we
respond differently in different environments. Certain behaviours are appropriate in the sphere
of market reality. In the market environment these personal tendencies are favoured:

• getting immediate results
• causing action
• accepting challenges
• making quick decisions
• questioning the status quo
• taking authority
• managing trouble
• solving problems
In the face of market reality these qualities are favoured over being nice, great communication
skills, fitting in, maintenance, and rigidity in following rules and so on.
The Behavioural Profile goes much deeper than assessing your aptitude i.e. in the market
environment how close you are to the dot points above. It shows what needs to be changed
and even how to go about integrating more desirable and effective behaviours.
Certainly before I take a client into my Best Professional Practice program I need to have a
Profile of their Personality and Aptitude to establish the base line to plan progress. In the next
instalment of the article we will turn to what it means to be professional and review some case
history material.

__________________
"Dyfal donc a dyr y garreg." Translation: "Tapping persistently breaks the stone."

CJIA

Best Professional Practice: Part 3
On Becoming Professional
What does it mean to be Professional? Here are some key synonyms: expert, specialised,
qualified, proficient, skilled, trained, practiced, and certified. We can go further. A professional
is in a paid occupation that requires a high degree of skill and competence. The opposite of
professional is amateur.
Think about professional people you come across. Perhaps your general medical practitioner is
a good example for comparison with a professional trader.
Your GP is like an intra‐day trader. Every 15 minutes he or she is presented with a new patient
and a new problem unrelated to the former. Furthermore some of the problems will be difficult
and subtle. Can the GP go to water when challenged? Absolutely not; rather he or she trusts
the years of preparation and methodology practice; he or she expects to be challenged and
even relishes it. Dealing with complexity is the hallmark of professionalism. The GP is detached
and objective in applying the model of observing, evaluating and acting. The GP expects to be
and is paid for best professional practice.
In your trading are you displaying best professional practice similar to the qualities displayed by
your GP, or are your endeavours amateurish?
To achieve an income of about 250 thousand dollars a year the GP has done 7 years of
university study costing 100 thousand dollars involving years of supervised clinical practice. Of
course the GP is committed to ongoing professional development throughout his or her career.
While studying, the prospective GP didn’t really know whether he or she was going to make the
grade but had faith that he or she would achieve the standard and that the process would be
worth it.
Although the journey to professionalism requires some sacrifice it is a risk worth taking.
Have you given a similar commitment to gaining and doing best professional trading practice
for a salary of $250 thousand per year? Do you realise that there is much to learn and practice
before the market qualifies you as a fully fledged professional?
Of course a trading professional has a huge advantage over a GP in that the GP is restricted to
the hours available for personal involvement. A professional trader’s income in not bounded in
this way: professional trading processes can be scaled up to any level. But scaling up is
impossible if the basics aren’t right.

Let me give you an anecdote to demonstrate what I mean about professional commitment. Just
yesterday I received a phone call from a client who wants to commence the Best Professional
Practice Program. His call relayed frustration and hurt because the previous evening he lost
$4000 trading overseas stock index futures. He has a full time job as a computer engineer
through the day. My response was to confirm that professional trading is a full time endeavour
because his successful counterparties are certainly full time professionals. My question to him
was this: “Would you go to a GP in the evening who had a full time computer engineer job
throughout the day.” Of course he wouldn’t. Because he has the aptitude and determination he
will cease work as an engineer; join the program and go on to be a very successful professional
trader.
A Case History
This account is typical of the scores who I have worked with towards best professional practice.
As a coach I don’t work with everybody who approaches me. After Profiling and preliminary
work for those who aren’t suitable I let them know. I work in depth with those who genuinely
want to be a full time professional trader and are prepared to work for it.
Ian’s story is typical of the transition to best professional practice. He came to me in a state of
frustration a few years ago. He was aggressive enough then to turn $10,000 into $50,000 but
then he would give it all back and then some.
Initially I worked intensively with Ian for a year or so with a number of hours of face to face
meetings over the period. We worked on probability and the model: cognitive work. We
worked on anticipation of high probability set ups as well as instantaneous, intuitive and
detached decision making. We linked the repertoire of trading skills with stages of the model.
But more importantly we worked on Ian’s barriers: his denials and illusions. We converted his
barriers, essentially a lack of inner worth and a sense that he didn’t really deserve his profits,
with the processes depth therapy or psycho synthesis. He experienced the emotional and
physical attributes of the zone of best professional practice through relaxation and guided
meditation. We broke the former pattern of inconsistency as we installed better procedures
for cutting losses and working winners. We set and focused on the goal to become fully
professional.
At the same time Ian has a wife and primary age school children. He sometimes needed to take
time out from trading to do contract work to feed the family. But his passion for and
commitment to best professional practice never waned.
Currently we work on the phone once a fortnight. I am pleased to report that Ian now
consistently makes a profit of around $2000 per week from his intraday trading. He is in a
position to pay himself a salary and doesn’t need contract work anymore.

Now that we have established the reliability of best professional practice on a small scale we
are poised to go on to in a measured way to much higher levels. The journey has been
confirmed but it has just begun. We still do the ‘inside work’ of meditation, guided imagery and
visualisation to maintain his focus and stretch. We do whatever it takes for Ian to maintain his
success and to go on with it. There isn’t a problem that we can’t solve. Ian is well rewarded
psychologically and monetarily by best professional practice.;
Ian has indeed courageously embarked on his hero’s journey and I have been privileged to
guide and witness it.
Can You Do It?
Remember your personal hero’s journey I reviewed earlier? I said this was a must for your
success in life so that you can transcend your personal and cultural barriers of neurotic fear and
denial. I also said that your journey was unique to you. Undoubtedly the journey requires of
you the courage and faith to achieve it. The hero’s journey gives meaning and purpose to your
quest. You need to venture on the hero’s journey in some aspect of your life, even if you don’t
entertain it in the trading sphere. In this case you would pursue that interest rather than
trading.
If you chose to trade, your journey integrates the Stimulus‐ Response model with best
professional practice. Like any journey it takes time, commitment, resilience and dedication.
Meaning and purpose is integrated with best professional practice so that you are motivated to
move forward. It’s like going up stairway to prosperity, fulfilment, freedom and achievement.
Unfortunately there is no elevator to the top; there are no shortcuts. It takes consistent effort
on your part.
But can you do it? Well yes it’s certainly doable: plenty of others have achieved it. You would
need to relinquish amateurism, your comfort zone, the norm of loss and inconsistency. In
addition you would need to introduce uninhibited responsiveness to the market as reality as
you launching pad. You would need to embrace under supervision learning your own
application of the model and dedicated professional practice. You would need to be committed
to reaching for success and taking control of your own destiny. You would need to be
passionate about becoming your best.
Ultimately best professional trading practice is a choice. Your choice! Like the trading heroes
before you, are you prepared to really go for it, to invoke the appropriate assistance, to do
whatever it takes, to ensure your victory? In the end it’s a question of will. Yes you can do it,
but will you do it?
You can if you will.

__________________
"Dyfal donc a dyr y garreg." Translation: "Tapping persistently breaks the stone."

distanteyes

I connect to what you are writing here Thank you,

My biggest issue at the moment is getting off the pc once i reached my goal.
Sometimes i reach my goal within 5 minutes of Trade so that even makes it harder to say "alright, were done here what`s next"
Usually i will keep trading and sometimes i will atlist lower my quantities..
But most times i will go on to lose a few (Over confident) and wreck my day and my mood(Ego-trading)
my biggest fear is to lose all my money before i really catch on ... i know i`m getting closer... but still make tones of mistakes.

Anyhow..
Thanks for that good read

new_trader

A post that deals in realities which, sadly, very few will bother to read because the thread is not titled "Set Ups" or "How to make money" or "My winning methodology" nor does it contain pictures of colourful squiggly lines with instructions on how to make millions..

All you get in this forum is "Wahhh Wahhh...Mr Guru.. Mr Guru...when should I buy?...wahhh wahhh Mr Guru...Mr Guru when should I sell?....Mr Guru please post another pretty picture"...etc

__________________
"It always pays a man to be right at the right time."
-Jesse Livermore

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N.B: Most of my views, advice and opinions are based on short-term trading.
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new_trader

Another great post and not a pretty coloured line in sight!

__________________
"It always pays a man to be right at the right time."
-Jesse Livermore

-----------------------------------------------------------------------------------------------
N.B: Most of my views, advice and opinions are based on short-term trading.
-----------------------------------------------------------------------------------------------

new_trader

Sensational. 10/10

...and no attachments!!

__________________
"It always pays a man to be right at the right time."
-Jesse Livermore

-----------------------------------------------------------------------------------------------
N.B: Most of my views, advice and opinions are based on short-term trading.
-----------------------------------------------------------------------------------------------

A Dashing Blade

Any chance of this being stickied?