Having got to the stage with trading where I realized that my basic market "read" was ok and trade setups were generally sound, I started to reflect on why I was finding it hard to translate this knowledge into a consistently growing trading account.
At the same time as I was considering this, I was also studying for the first time in many years for a professional qualification in Project Management (the old day job.)
In pursuit of success in the Project Management qualification I decided to give myself a very strict timetable for learning the methodology and its application and had also booked a date for examinations. My intention was to give myself a goal (get the qualification), build the motivation (the exam booked in advance) and the focus (specific hours a day studying) needed to succeed.
The result of this was that I succeeded in my goal. I then spent some time reflecting on what lessons I had learnt and how I could apply this to trading. A side-product of the PM training was that I also learnt the value of some concepts that would assist me in treating trading as a project with specific deliverables, timescales etc.
What I needed to succeed in trading was to operate in a highly structured environment. This seems obvious but until this point I hadnt appreciated its importance, especially in terms of tracking performance and for defining boundaries for whats acceptable and not acceptable trading behaviour.
The end-result of this thought process was for me to create a master trading document that lays out a very strict structure and governs every aspect of trading. It incorporates the following:
Plan Overview for the current Month (The Long term Plan for trading is broken down into Monthly stages plan no further ahead than this.) Objectives for the current month, number of trading days, current account size, # of lots to trade, daily loss limit, weekly tick target.
Trade Plan - Document of rules for trading, and trading setups.
Morning Log A document to be completed every morning prior to trading, detailing expected news items. Technicals levels etc, pattern formations. Expectations for the day. Goal for the day. Review of what the market actually did. Trading results for the day this doc is printed and filled in by hand.
Trade Log records all trades including MAE, MFE (very important.)
Lessons Log records lessons learnt for the day.
Progress Chart an excel doc that creates a bar chart view of your account, so each day in profit is a green bar up and a losing day a red bar down (very powerful visual tool)
Printed chart at end of day marked up in hand with trades taken and patterns highlighted
Daily video review a round-up of how the day went lasting no more than 10 minutes
Weekly Video Review a review of the week, what went right, what went wrong, did you meet your weekly target etc.
At the same time that I was devising this structure I came across the webinar on futures.io (formerly BMT) by TopStepTraders. I was very interested in their Combines but I didnt feel that I needed to sign up with them. Instead I created my own Monthly Combines.
In order for this structure to be effective I have some hard rules for non-compliance which result in me losing my right to trade for the day, or if I really overstep the mark and dont follow the plan I lose the right to trade for the week and possibly for the remaining month. This stuff is a powerful motivator!
This process is still work in progress but the change in my focus, attitude and trading psychology has been unbelievable and so far the results have been very positive, ie my account is growing!
I hope to be able to share my progress here on this journal as time passes.