Pathway to Sustainable Trading

The Irony of Trading
The irony of trading is that what attracts us to the markets, to make money, and to make it now, not tomorrow, can be an impediment to our success. Our need for instant gratification focuses our attention on finding that elusive perfect entry technique that will deliver a painless, home run, slam dunk, glorious trade. It encourages impulsive trading, it feeds revenge trading, it turbo charges our ambition to achieve the impossible. Instant profits. Instant success. Instant riches. Instant failure. Yep. Our emotional disorientation, fed by our greed, has us focused in the wrong direction. It puts us on a boom or bust path.

It’s not how you survive in this business of trading.

Nup.

Although our greed attracts us to the markets, it also works against our long-term interest, which should be sustainable trading.

We shouldn’t be interested in making money today or tomorrow. We should be playing the long game where we should be focused on making money not only in the present, but also into the future. To make money not only this year, but next year and next decade.

To do this you need to place yourself on a pathway to sustainable trading.

Trading is not about instant gratification. It’s about placing yourself in a position to continuously engage with the markets. It’s about being present in the markets to take advantage of trading opportunities when they appear. Positive expectancy opportunities. Opportunities we don’t know when they’ll appear. But appear they will. And unless you place yourself on a sensible pathway to sustainable trading you will not be present to take advantage of the opportunities when they occur.

Below I have summarised my pathway to sustainable trading.

If your objective is to be a long-term successful trader who is the best loser, then I would encourage you to follow my pathway, or a similar one, so you’ll always be present to take advantage of the opportunities when they appear, whether it is today, tomorrow, next week, next month, next quarter or next year.

From my pathway below I’m able to help traders with steps 1, 2, 3, 6 and 7.

Pathway to Sustainable Trading 101
In a nut shell, to put yourself on a pathway towards sustainable trading you’ll need the following;


1. Knowledge – Awareness
First up you will need to learn the truth about trading. It’s not what you think.


2. Knowledge – Foundation

You will need to acquire proper trading knowledge to build a successful trading career upon. Without it you will lose. Guaranteed.


3. Trade Plan & Portfolio

You will need a complete trading methodology detailing;

          – When to trade (Setups)
          – Where to enter (Entries)
          – Where to get out (Stops)
          – Where to take profits (Exits)

that you can either execute mechanically (like myself) or on a discretionary basis.

Along with a trade plan you will need to avoid data mining by selecting an objective, independent and diversified portfolio to satisfy your;

         – Trading capital, and
         – Risk profile.


4. Measure, Benchmark & T.E.S.T

You will need to acquire back-testing software to build your methodology’s historical equity curve and measure its expectancy and %ROR.
You will need to benchmark your efforts against good well known established strategies.
If your strategy is superior to the benchmark then you will then need to complete a T.E.S.T.


5. Broker & Execute

You will need to open a trading account and consider trading live.


6. Mentor

Ideally you should be able to trade beside a full time trader to watch and learn.


7. Repetition

You will need to develope new habits that will only come from the continuous daily repetition of application and execution.


That’s it.

I can help with steps 1, 2, 3, 6 and 7.


1. Knowledge – Awareness

Despite the marketing hype surrounding trading it’s not what you expect. Your trading knowledge will begin once you become aware of what trading is really about. So the first step is to remove your blinkers so that if you do decide to pursue trading you’ll be doing it with your eyes wide open.

My book The Universal Principles of Successful Trading (Wiley, 2010) will deliver the sobering truth you need to learn.


2. Knowledge – Foundation
My book The Universal Principles of Successful Trading (Wiley, 2010) will also provide your trading knowledge. You will come away understanding the requirement and importance of having a plan for each of the three main contributors to sustainable trading success;

  • Methodology
  • Money Management and
  • Psychology

You will learn that ROR is singularly the most important concept in trading.


3. Trade Plan & Portfolio

Anyone of my mechanical models will give you a complete trade plan (setup, entries, stops and exits). You just need to determine which part of market structure you’d like to trade and see if one of my models appeals. Please refer to my “Mechanical Models” page.

You will also need a selection of markets to trade. To avoid data mining you should select an objective, independent and diversified array of markets. The size of your portfolio will depend both on your trading capital and individual preference for risk. Please refer to my Portfolio page and each models’ page.


6. Mentor

Each of my models comes with its own Daily Study Guide where owners can watch me apply my own models in real markets, in real time with real money. They get to watch the developer (me) trade their own model. Traders get the opportunity to watch a professional trader (myself) trade according to the methodology in question. Watching another trader apply and execute the model you trade helps to reinforce your understanding of the model’s methodology.


7. Repetition
Success requires developing new daily habits of continuous market study,  application, execution and trade management. The longer a trader subscribes to their model’s Daily Study Guide the more repetition they will experience and the more intrinsice their new daily trading habits will become.


That’s it.


Yes, I know it may appear that I have oversimplified what is required, however when it gets down to brass tacks, successful and sustainable trading is no more and no less of what I have summarised above. It’s what I do. If anyone tells you differently I’d beg to differ.