1. Judgement 2-min

A Fair Criticism of Me

Hi there PAST Traders!

I hope you’ve had a great week!

So, last time I wrote a post criticising my own trading strategy. If you haven’t read it yet, you can can check it out here.

This week, I’m going to step things up a notch by looking at something else.

I’m not going to pick apart my trading strategy this time though. Instead, I’m going to do something that very few traders do (in public at least).

I’m going to criticise myself and my abilities as a trader.

So fasten your seatbelts for what promises to be a rough ride!

My hope is that after you have finished this post, you might have some ideas about areas of your own trading you can improve upon.

So let’s get started…

It’s Not All Bad

Ok, so I think I did a pretty honest appraisal of the PAST Strategy last week.

I pointed out that the Strategy really does struggle in quiet markets.

But it’s not all bad news, because when put to work in active, moving markets, the PAST Strategy can deliver incredible performance.

In summary, there are times when it is untouchable, and there are other times when it’s not so good.

And that’s actually not too dissimilar to me as a trader.

I’m great some of the time.

But the rest of time, I’d say I’m average at best. I just try to make sure that the profits I generate when I’m trading well are far greater than the losses I make when I’m not so good. That’s the key.

2. pie chart trading-min

Before I get stuck into eviscerating my shortcomings as a trader then, I’m going to highlight the things that I like to think I do well:

  • Reading Price Action – I’m excellent at it. The thousands of hours of screen time have paid off. It’s like second nature to me now. I’m really good at identifying who has control of a market, and recognising when a reversal, a shift in that control, might be beginning to take effect.
  • Running Winning Trades – when the market is active and moving well, I’m able to ramp up my aggression levels and squeeze as many pips out of a trade as possible. I don’t jump to take profits quickly.
  • Taking My Losses – my tolerance has been tested in the last couple of months, but broadly speaking, I don’t take it too personally when I have to take my share of losing trades. It’s never pleasant, usually I’m able to suck it up and get on with things.
  • Faith In My Trading Strategy – the PAST Strategy is a bit like an extension of me now. I know where it succeeds and where it struggles. I know its weaknesses. I know it well enough to have faith that as long as I can stick to the rules, it always comes good in the end, despite the dry patches!

I think it’s important to make sure we, as traders, give ourselves credit for the things we excel at.  We tend to be quite hard on ourselves sometimes.  All of us have things that we do well, and we should take the time to notice that.

But, we all have things that we don’t do so well too. And even if it is a bit uncomfortable, we  should take a moment to look that those too!

3. B--min

Now Onto The Juicy Stuff!

Right, so we’ve looked at the things I think I do well as a trader. Now let’s look at the things I need to work on:

Greed – part of my problem is that I’m always looking for the next big move. When I say “big move”, I mean multi-thousand pip move.

I fully admit, I’m strongly influenced by the difference big winning trades can have on our overall performance.

But recently, pinning my profits on (a) a big move actually occurring and (b) me actually being able to get a position in play on it, has led to months of flat/underperformance at a time.

Inefficiency – I talk all the time about how we should trade like a business.

But if you are always looking for the next big move (like me), it’s inevitable that you miss lots of the smaller ones.

I sometimes shudder to think about how many pips I’ve left on the table on trades that have got 50/100/200 pips in profit, but have retraced back to breakeven, leaving me with nothing.

Emotions – I tend to put on a pretty brave face when it comes to trading. For the most part, I’m pragmatic about the ups and downs that are part and parcel of being a trader.

But I’m not a complete robot either. I have feelings too!

There are times, particularly during the trading droughts that I sometimes experience, where I find my thoughts turning inward and focusing on the negatives.

It just goes to show, no matter how confident you think you are, and how strong your convictions are, the market will always find a way to humble you again. If you get above your station, the market will bring you back down to earth with a bump. That’s just how it works.

Risk Management – position sizing, stops-losses and all that – I’m good at all of those things.

But risk management doesn’t just stop at that. Good risk management also extends to making sure that I don’t needlessly put myself in harm’s way.

For example, part of trading is knowing when to take a step back and closing the platform. Walking away and doing something else when it would be easier to stay and try to force an opportunity where nothing exists.

Being able to stop a handful of losing trades, which are nothing in the grand scheme of things, turning into a losing streak of damaging losses.

For me, these are risk management issues too. They aren’t things that I’m terrible at, but there is still a lot of room for improvement. I think these issues are things that are a constant battle for most traders.

Stubborn – back when I was learning how to trade, I tried practically every single trading system and strategy under the sun.

That’s no exaggeration.

At one point I stopped trading because I had literally run out of new approaches to try.

So when I finally came up with something that worked for me, the PAST Strategy, I clung onto it.

And I’ve become like an old man who is stuck in his ways. I haven’t been receptive to new strategies, or even tweaks to the PAST Strategy. I’ve had tunnel vision.

But, as I’m sure you can imagine, doing this has worked both for me and against me.

Yes, on the one hand it helps me avoid the system-hopping trap that many new traders fall into. But it also hinders me when the market changes and conditions do not suit the strategy.

4. hopper-min

How I Plan To Improve

I have ideas about how to improve all of these negatives.

Some I’ll just need to work on for a while, correct them, and that will be them put to bed.

Others, like the emotional side of trading, will require constant attention and monitoring forever.

I don’t ever envisage that there will be a time where I can completely kick back and relax. There’ll always be something that can be worked on and improved.

Trading, like any skill or profession, always evolves and presents new challenges along the way.

I hope this analysis has inspired you to take a few hours, step back and honestly take a look at where you can improve.

As I say in the PAST Video Course, trading is a continual process of making the most out of our strengths and mitigating the negative impact of our weaknesses. And the first step to doing that is identifying where those strengths and weaknesses lie.

Something Interesting To Finish Off

Finally, something interesting occurred to me as I was putting together the two lists above – the things I am doing well, and the things I could do better. Perhaps you noticed it as you were reading through them.

A lot of the negatives in my trading are simply a result of doing too much of the positive things.

Did you notice that?

The ability to run winners, if done to excess, turns into greed.

The ability to stick to a strategy, if done too much, turns into intransigence.

So just remember, you can have too much of a good thing!

So What’s The Takeaway Then?

Well, I suppose it’s like anything in life – it’s a question of balance.

It’s easy to drift to the extremes. It’s harder to strive for balance.

I think the market recently has gently reminded me of some weak points.

Weak points in my strategy, and weak points in myself.

And I’m glad it has happened, because it gives me the opportunity to work on those weaknesses, to grow, to improve and get stronger.

That has to be a good thing, right?

Hopefully this self-analysis has encouraged you to carry out a similar exercise. I’d encourage you to audit your strategy and audit yourself. Identify what you are doing well and identify what you can improve on.

Then get to work.

That’s how we get better.

All the best,

Nigel

 

P.S. We had a good session in the Pro Workshop on Friday where we looked at what often happens after periods of low volatility, Jackson Hole, backtesting, ranging markets v trending markets, good trading books, and to top it all off, my featured trade triggered in style on Friday afternoon too! Pro Members who couldn’t attend are welcome to watch the recording here.

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DISCLAIMER & COPYRIGHT

This update is based on my analysis on my charting package. It may differ to yours as it can be affected by time, market movements, charting packages and broker prices. I accept no liability for loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on any information in this report or analysis.