$100 Cash Contest: Describe a Unique Part of Your Trading Process or Methodology That Has Helped Your Trading

03/05/2016: Thank you to all of those who participated in this contest. There were some great stories and responses (still available to view in the Comments section below), some of which didn’t directly answer the original question, but were appreciated nonetheless. Here are the responses that I felt provided the most unique answers to the following question (I’ve also included my own insight and commentary related to each response):

QUESTION:

Describe a unique part of your trading process or methodology that you feel has contributed to your improvement and growth as a trader. In addition, explain how it has actually helped improve your trading.

BEST ANSWERS (4):

Though I had to choose one answer as the “winner” for the sake of this contest, I felt that each of these answers was creative, unique, and important. I recommend that you consider trying to integrate them (or a variation of them) into your process, methodology, or routine.

Derrick – Filter out the noise by Unfollowing people on Twitter (WINNER)

Derrick believes in the importance of filtering out noise – specifically, Twitter noise. When he began his journey as a trader, Derrick followed a lot of traders on Twitter, and consequently, found himself making random trading decisions based on the various sources of conflicting noise. Over time, he realized that 75% of that noise was based on a timeframe different than what he was actually trading. As a result, he began unfollowing people, and came to find that the “Unfollow” button became his “best trading tool”. Derrick explains: “Following fewer traders allowed me to prevent myself from being shaken out of positions that I normally would have been shaken out of when a trader on a smaller timeframe would announce their position that was opposite the position that I was holding.” Furthermore, he says: “When you take in too much noise, it’s either going to: 1) Cause you to take every mediocre setup that you see, 2) Paralyze you when noise conflicts with other noise, or 3) Shake you out of positions that you otherwise would have no reason to exit.”

I agree 100% with Derrick. If you are going to use Twitter while you trade, then it’s important that you eliminate noise which could potentially cause conflict with your trading methodology. The more noise that you enter into the equation, the more difficult it will be for you to truly see the effectiveness of your edge over time. I personally close Twitter when I trade and, to go a step further, also close out any computer applications which could potentially cause distraction (e.g. communication applications such as e-mail or instant messaging). In addition, I put my phone in Do Not Disturb mode so that notification sounds will essentially be muted until I say otherwise (Note: In case of a family or close friend emergency, only contacts in my Favorites list (in iOS) can get through to me via phone while Do Not Disturb is enabled). Do as Derrick does – block out the noise while you trade. Allow yourself to quiet your mind so that you can focus on the market and increase your ability to “Trade in the Zone”.

Daniel – Keep a non-trading-related checklist for other areas of life (RUNNER-UP)

Daniel uses a non-trading-related checklist which helps him keep his life “balanced, productive, and strong”. Some examples of his checklist include: Exercise, Diet, and Family Time.

In “The Daily Trading Coach”, Brett Steenbarger speaks of the importance of “Psychological Diversification”. Basically, if we put all of our psychological eggs in one basket (the trading basket), then that in turn puts a great deal of pressure on us to perform well in our trading since our trading performance is the primary source of psychological satisfaction in our life. It goes without saying that this can be incredibly dangerous, both from a trading and mental health point of view. So, from a trading perspective, it is essential that you identify areas of your life that you’d like to focus on (e.g. Spiritual, Exercise, Social, etc.) in order to build up your Psychological Diversification portfolio. Daniel’s idea of creating a non-trading-related checklist which includes items from other areas of your life is an important one that many traders overlook as they work towards profitability.

I believe Psychological Diversification is one of the most overlooked aspects of becoming a successful trader. In order to truly be an exceptional trader, you have to be exceptional in other areas of your life. This is a core part of my methodology, and I hope that you will consider making it a part of yours, too. See Daniel’s comment below for additional information on other types of checklists that he uses to plan, execute, and evaluate his trade-related decisions and personal performance.

Fabio – Put yourself in a zen-like state of mind with a freezing cold shower

Fabio explains: “My pre-market routine is my biggest trading edge – not my charts, not my strategy, nor anything else.” Fabio wakes up early (4:30am-5am), goes to the gym to have a meaningful workout (i.e. none of that “walking at a 25 minute-a-mile pace for 15 minutes” shit (my words, not Fabio’s)), has a post-workout fruit and vegetable smoothie, and then takes a a freezing cold shower. He says: “The result from this routine releases a chemical dump in your bloodstream so calming and peaceful that you’ll be in a zen-like state for the first few hours after you settle down.” In addition, he states: “primarily, it keeps me in a balanced state of mind to execute and cut trades when required.” Finally, he says: “The primary weapon in every trader’s arsenal is their mind and body, not something on a chart.”

Putting yourself in a zen-like state of mind where you are relaxed and focused is an essential part of being a profitable trader. Fabio describes his pre-market routine which allows him to enter this state, essentially acting as a trading edge in and of itself. If you come to the market anxious, tired, hungry, angry, etc., then no matter how good your trading edge is, your trading performance will more than likely be impacted in a negative way. I personally haven’t tried the freezing cold shower approach, but Fabio makes a compelling argument that it (along with the other steps of his routine) make a big difference in improving the state of his mind and body. Treat your body well (get enough sleep so that you feel rested and recharged each day, exercise regularly, throw out the junk food and eat a healthy breakfast, take a cold shower) and treat your mind well (meditate, practice breathing exercises, listen to relaxing music, come to the market free of personal conflict (e.g. relationship problems)) and you will make your journey as a trader a hell of a lot easier.

Nick – Use a stopwatch to keep yourself in valid open trades to your average winning time

Nick’s unique process-related approach that has helped his trading involves using an iPad stopwatch to help keep him in an open trade based on the knowledge that his winning trades take a certain amount of time before they work. To increase his open trade time (once a trade is initiated), Nick: 1) Changes his market view to a larger timeframe (from the 1 minute to the 5 minute) in order to filter out the noise of the smaller timeframe, and 2) Starts a stopwatch on his iPad (which is made easily visible on his trading desk) to remind him, based on his previous trading data, that his winning trades typically take anywhere between 15-30 minutes to work, and that he must be patient so that he can hold to his average winning trade time. Repeating this process has improved his patience with staying in trades – something many traders struggle with.

An important part of being a profitable trader is reviewing and understanding your trading performance data and then adjusting your process or methodology based on that data. By understanding your trading performance data (such as the average time of your winning trades), you can create solutions (such as the iPad stopwatch solution that Nick shared) which can help you achieve specific goals or objectives related to that piece of data.


03/02/2016: The contest has concluded, fellas. I will review the submissions this weekend and choose a winner by the evening of Sunday, March 6th. Thank you to all of those who participated; I’m sure there are many great responses – I’m looking forward to reading and sharing them with the community.


Original Post:

Though Twitter has many snake oil “traders” who distort the reality of their trading performance in addition to many lazy “traders” who just want to follow others into trade ideas instead of taking the time to learn and build their own tested methodology, it can offer value to those hardworking traders who have built (or are in the process of building) their own process and methodology. Personally, I’ve enjoyed using Twitter as it has helped me reinforce good trading habits by both restating them publicly and talking about them with other traders.

So, at the @BreakingOutBad 3,000 Followers milestone, I’d like to give back to both the Twitter trading community and my Followers by asking the following question (and subsequently rewarding the submitter of my favorite answer with $100 Cash, payable via Square Cash, which I can help the winning participant easily and anonymously setup via Direct Message on Twitter). Hopefully there will be some unique and interesting responses that each of us can potentially incorporate into our own process or methodology.

Submit your answer in the Comments section below.

QUESTION:

Describe a unique part of your trading process or methodology that you feel has contributed to your improvement and growth as a trader. In addition, explain how it has actually helped improve your trading.

Note: Your answer must be unique (i.e. Don’t say that you keep your winners big and your losers small). You must include your @twitter handle somewhere in your Comment below so that I know who to contact via Direct Message on Twitter. I will only accept the first 15 submissions.


Questions or Comments?

If you have any questions or comments about this post, then feel free to send me a Mention or Direct Message on Twitter @BreakingOutBad.


17 thoughts on “$100 Cash Contest: Describe a Unique Part of Your Trading Process or Methodology That Has Helped Your Trading

  1. Not sure how unique it is but since I am on more of a medium to long-term time frame I only enter/exit trades on a Monday and then shut off the computer until the next week. Not watching the daily pnl of each trade allows me to focus on my “real” job and helps me avoid the trappings of all the noise associated with the market. Also, if I’ve sized the trade correctly I sleep better at night knowing my process will get me out the next week without taking too much pain. @mwreyno

    Liked by 1 person

  2. Most of my entry was perfect like price always move in my predicted direction but before it stop me out of the trade, I was trading on 1 HR , 15 min and smaller time frame, more than 50% of my trades hit SL. So I checked my trades and then keep the same strategy but move to higher time frame like 4HR, daily and weekly. I realised that it can reduce my loss. Then I started to trade on higher TF and keep getting more winning trades then loosing trades but still I was not totally happy with my returns. Then I start trade’s with micro lot because I wanted to find an edge on the market, and I don’t want to loose big money for that, after 2 years I have managed to get the edge on the market by following my strategy with great decipline in every single trades. When ever I try to change my plan I get really bad hit by the market.

    It was really hard to stick with small capital and trade with micro lot because I have lost all my savings in the first year of trading journey. I always have a burning desire inside me to learn trading, I fixed my mind that I have lost all my savings by trading without knowledge, I can earn back the money by trading with proper knowledge. I kept my self busy studying the market and read and understand every single article regarding trading just without thinking about my savings. Now my trading is lot more better but still not satisfied because I want to learn the professional side of it, how the prop firm trades and what the professional traders have access which I don’t have, because any time I make a loss on the trades I start trying to find the reason for it and try to improve in next trade. I try to learn from everyone but I utilities that knowledge according to my plan.

    Liked by 1 person

  3. Not really a valid competition entry as I copied the process you, but as a new day trader I have found hiding the P&L has considerably reduced the emotional impact of trading. It enables me to focus on my stops and targets, and more importantly sustain patience when waiting for a price to move. @Adam_S_Michell

    Liked by 1 person

  4. It might sound cliché, but the best thing I have done to improve my trading is simply filtering out noise. I am a relatively new trader, and as most relatively new traders do, I tried to absorb every piece of trading advise/style I could get my hands on. I read 10+ books within my first year trading and followed over 100+ traders on Twitter, heeding to every piece of content (noise) they would tweet out. Once I realized that over 75% of the advise I was getting was on a different time frame than I was trading, the unfollow button became my best trading tool. By following fewer traders, this allowed me to prevent being shaken out of positions when a trader on a shorter timeframe announced their position against the positon I was holding. When you take in to much noise, it’s either going to a) cause you to take every mediocre setup you see b) paralyze you when noise conflicts with each other or c) shake you out of positions when you would otherwise have no reason to exit. Also, you need to find a trading strategy that fits your level of patience and believe in the strategy. If you don’t believe in the strategy you’re trading, smaller amounts of noise will invalidate your trade idea. And if you’re trading a strategy that doesn’t fit your level of patience you’ll either end up over trading or pass on quality setups in search of perfection.
    @derrickprice

    Liked by 1 person

  5. The biggest difference maker in my trading has been patience. I used to be so eager to enter a trade and book profits, especially since I have a full time job and only had a couple of hours in the early am to trade. I had a psychological tendency to want to make the most of my limited time, and I saw trades that I thought “could” work so because I sought not to waste limited trading time, I relaxed my trade set up standards and visualized my idea at the moment being a winner…the story ended up as you would expect with not many winners. Once I forced my self to be patient on my entries, I ended up getting good trade location, and the rest kind of took care of itself. I follow my plan and all that I have learned, but being patient and being willing to not trade, has made a huge difference.

    Liked by 1 person

  6. A 2 sided trading check list that includes a plan, execute, evaluate and personal scoring section. On the second page i have 6 individual checklists for each trade taken during the day including product, time, my specific setups, entry location and position size.

    Every trading day I wake up fill out the Plan, MTF trendlines, tpo, fibs, stop zones, demand zones etc.
    Only after plan comes Execute which includes my setups in some detail and the individual checklists, i only take these trades period and fill one out for each trade I take.
    After trading comes Evaluate which includes Edgewonk, an “emotional” journal and an annotation of a key chart of interest. I also set up alerts at specific areas that might provide a trade.
    Finally comes the trader scoring which includes both performance and process goals to be achieved during each session, such as sticking to position size, completing the plan section, trading only my setups and enjoying my time in the market, 10 questions/ 0-10 scoring

    I also have a daily non trading checklist, that includes exercise, eating correctly, to do section, and family time etc.

    The weekend also has a checklist that includes the review of edgewonk, the annotated charts, cleaning up the charts, performance etc. A review of other markets that are not often traded. Also an improve or avoid section.

    Basically Checklists, I leave no question as to what needs to be done at anytime in and around the market.
    Also my non trading checklist keeps my life balanced, productive and strong.

    @tradehunter

    Liked by 1 person

  7. My Pre-market prep is my biggest trading edge, Not my charts, my strategy, or anything else.

    Awake at 4.30- 5am, hit the gym hard. Return home to a green veg and fruit smoothie/juice, now have a freezing Cold shower. Thats it.
    SIimple, deceptively simple.

    The result from the above prep releases a chemical dump in your bloodstream so calming and peaceful you’ll have a zen like state for the first few hours after you settle down.

    Cold shower stimulates the “Blue spot of your brain- The Locus Coeruleus -clusters of neurons inwhich all brain connections using norepinephrine arise; it is active during conditions requiring attention and mental focus.

    And the juice/smoothie drink further stimulates brain activity rapidly after consumption, as shown by MRI scans.

    The above regime is no accident, I did the research.

    In all my years trading, nothing compares to the above pre-market prep which allows me to see the push and pull of movements considerably clearer than if I didn’t have it. Allows a far greater willingness to accept when trades may not be working, and primarily it keeps me in a balanced state of mind to execute and cut when required.
    The market in-itself can be categorised like a living creature, it behaves with the exploration of a child allot of the time, whilst other times it flees with the fear of a rabbit.
    The above regime without doubt allows me a few moments of time a “head start” when the signals that suggest exploration up-tail and hop-away. The words “I was too slow to see this, or too slow to recognise that” become far more rare when the above regime is followed.
    When it isn’t however, I am far slower without question.

    The primary weapons in every traders arsenal is their Mind and body.
    Not someting on a chart.

    @PastaTrader_Fab
    (If i Win, please donate to a charity of your choosing. thanks)

    Liked by 1 person

  8. I’ve realized I was completely ignorant to how extremely important my mindset is to my development as a trader. I was scared, greedy and risky. Anyone can identity a buy/sell signal and pull the trigger. However, managing that trade with proper size and being completely objective is key. By removing my fear of being wrong (by using proper sizing, etc) my trading has become enjoyable and profitable again.
    Cheers!
    @rlkmac

    Liked by 1 person

  9. One thing that has helped me is a complete trade review after the day is done. During this time i want to re-Live the experience and note things to improve. A recent thing I wanted to improve on is holding onto my trades. So after i enter the trade i stop watching the 1 minute chart (my normal time frame is the 5 min), second I set up my ipad on my desk and start the stopwatch (also shut off my auto lock feature so it stays on). This way I’m aware of exactly how much time has passed, and i remind myself that my trades can take 15 to 30 mins to work.

    Another thing was your suggestion, Evernote, I constantly add notes about the day, how I’m feeling, what I think of the markets Etc.

    Liked by 1 person

  10. I’ve never been wealthy.
    Unfortunately I would not fit in the “should start with 5k to 25k min. account if you’re serious about trading” category.
    But I’m serious about trading. At least I became!
    It all started about 3 years ago, when after demoing for only a couple of months on a terrible (web-based-platform) broker, I racked up some cash and naively opened my ridiculously small trading account.
    One only thing I made seriously, I did the research and avoided that embarrassing broker.

    So I started a guessing driven and erratic trading, then I suddenly became the worst indicator junkie (actually spending nights on not-so-legal russian message boards)!
    My equity line was schizophrenic but I didn’t merely knew what it was…
    Anyway, despite some fulfilling good trades, I was losing on the long run.

    One day I found myself in front of my charts and realised that I couldn’t understand nothing, as I could barely see the candles!
    So I rejected all of my indicators and finally started studying about the markets, gathering day by day more serious and complex material.
    And fell in love with trading.

    Gaining more confidence led me to grow the account from 280€ to almost 4k in less than 3 months;
    I was acquainted with Greed and oversizing.
    Then one day when I was backtesting entries with pending order I pushed the wrong button and entered a massive (for me at least) random position on Dax;
    just the spread on filling was so scary that I couldn’t close the trade right then, the Fear had arrived!
    It took as early as fifteen minutes for the plummeting Dax to get me on a Margin Call, and I was here staring only at the P&N and I could not managed to react! 4K to 76€ like a blink!

    I was so beaten down and depressed that I didn’t even switch my pc on for weeks trying to hide feelings to myself! I could not afford to make a deposit and all day long my inner voice was shouting to myself: “Four thousand f**** €uros!! these were in your pockets!”

    But true love it’s hard to die.
    Thinking of trading, all of these feelings were building up inside of me and finally I pleaded guilty and I exported and reviewed all my trades from the very first day and came out that on thousands of trade I had a profitability of 62%!

    So (still not trading yet) I put down a very sound Trading Plan focusing on Money Management and Return on Risk (expected & real).
    Went through all I could found on Trading Psychology (tons of books, webinars & audiobooks)

    And finally the D-day arrived and fearful as a kid sent to war I switched on my platform again;
    with all the 76€ left, I started trading diligently on microlots firstly with a pressured Risk% of 10% of equity that I managed to offset gradually to 2% as I progressed in growing back the account!

    It took a very long time, Pain, Efforts and maybe a little bit of luck… but this time within a clear Framework, with Discipline and taking a Trading Journal, that pocket change left survived!

    1) Now I have my Daily Routine, I prepare my charts with levels and analysis for my trade ideas in advance (starting on the weekend especially for screening Stocks to put on watchlist).

    2) I Swing Trade Stocks via cfds (I’m not as wealthy, yet )
    doing all my analysis on the 1D, use the 1H for trade execution and the 4H for Trade Management (basically for trailing stops based on structure and Atr).
    Prior analysis is made on Key Levels I map the markets with and when applicable based on Harmonic Patterns (especially AB-CD, Gartley, Bat & Butterfly) that I find very powerful since there are forming at my predefined Key Levels only!

    3) I trade an Aggressive Short-Term Strategy on Dax, where I use Volume Profile to get the Value Area and the Volume Point of Control; equally I use my Key Levels from 1D & 1H but all the execution from entry to exit is managed on th 5M with various Setups.
    One of my favourites is the Opening Gap! So I’m always at my desk by 7:45 (especially on Mondays!)

    4) I trade a Momentum Strategy based on Price Action Patterns (Flags, Channels, Wedges & Triangles) plus Divergences on Macd and reaction or failure of Key Levels I still map from 1D and use 1H & 15M to Analysis and execution.
    I trade this on Crude Oil, Bund, Gold, S&P500, Nikkei, EuroStoxx and few selected Fx pairs.

    On the Swing Trade Stocks and the Momentum strategies I plot 28/50/100/200 SMA with a color coding that makes barely visible the 28 and little bit more the 100 and then the 50 & 200.

    Sometimes I use Fibs but just for confirmation or when setting up Profit Targets.
    Sometimes I switch on/off the Daily Pivots if I need to understand unpredicted behaviour of PA at some levels.

    In the end one of my most important tool is Setting Alarms on all of my Key Levels in the markets I follow.. I’m plenty of alarms that flashes on the platforms and are also sent to my smartphone!
    So I know always when prices hit my analysis levels!

    And never ever trade News Events! (except catalysts for Stocks)

    Well I hope I didn’t bore you to tears…
    I’m Matteo from Italy, @mbertox

    See you on the floor! 🙂

    Liked by 1 person

  11. I follow the trend and advice of traders such as yourself on twitter and spread bet using very small positions (0.5 on indices and 0.1 on FX, no stocks). I trade daily and use very tight TP levels but very wide SL levels (sometimes no SL) so I can bank small profits of around £20-£30 a day and can ride out unrealised losses of up to a couple of hundreds (in which case I can average and ride the trend back down to profit). I’m happy with small profits here and there as this is just a hobby to make some weekend spending money on the side on top of my salary from my full time job.

    Liked by 1 person

  12. Understanding the environment I am in is my USP. Is it funadamental/technical/driven by a 3rd party indicator (amongst a myriad of others)? Understanding what is driving price and flow allows me to establish the path of least resistance, which means that, at the very least I am able to understand where potential dangers lie.

    Liked by 1 person

  13. As a previous 2k follower champion I feel obliged to vomit my 2 cents.

    You already mentioned twitter as a live journal and to put your trade ideas out there for everyone to see really improves every aspect of trading. But before I joined twitter…

    All my methodologies are hinged together, so here is my combo:

    -I double analyze an idea. I strip my charts naked from prior lines and convictions and do them again. Sometimes 3 times. If I still feel the same about the trade idea than I sell my house and open a position.

    -This one sounds a bit OTT but I skim through a whole trading book before I gun. To get a feel for that textbook setup, I actually read through my own articles over and over too. Believe it or not no matter how many vitamins I pop I don’t react the correct way everyday. So it does all the difference when I remind myself how to.

    -3 green lights before I enter. Risk on/off+clear space to trade into+textbook/no brainer setup.

    @zfxtrading

    Thanks for the opportunity. I really put my heart and soul into this.

    Best
    Miad

    Liked by 1 person

  14. come what may, i dont give much importance about what data is expected to come from govt,or what cud literally change the course of markets etc..i just trust my charts and trade without any bias.Reason for this is that when we identify a system and test it, we just backtest it..we dont check on a micro levels about the volumes/open interst/FII data(foreign institutional investor) data/expected news/how europe or US closed..etc.. so in short trading works as we have a system and its followed without any bias…
    also i have seen to it that my system is kept as simple as possible. pure price action /gaps/two moving averges and its done. simple system is also easy to analyse during real time.
    @nareshbahrain

    Liked by 1 person

  15. What makes my trading unique:

    I ONLY trade on 10 Day/1 Hour candlestick charts. The unique part is I use the following on a single 10 Day/1 Hour chart: 5, 10, 20, 50, 100, 150, 200 Day SMAs; 5, 10, 20, 50, 100, 150, 200 Day EMAs; Linear Regression on a 10 day; and standard Bollinger Bands.

    I consider it unique solely for the fact that upon first viewing, it looks like the matrix. Upon further examination and screen time, you’ll see stocks trade from supply to supply, to demand to demand once an hourly candlestick confirms above or below the previous hourly candlestick. It helps me gauge price targets and set risk knowing that price action often briefly bounces or rejects each specific “line”.

    Thanks for your time,

    Adam W.
    @BuckeyeTrader87

    Liked by 1 person

  16. My methodology:

    I trade FESX (Eurostoxx 50) as an momentum scalper using volume and market profile to give me a clue into the context of the market for the day I’m trading.
    I look for 4/8 tick setups with 2/3 tick risk.

    The biggest key on my journey so far is

    Journaling

    Since the beginning I focuses solely on refining my entries and developing my edge in the market. This was important however I wasn’t getting anywhere as I was missing out on a fundamental issue, a classic one; inverse risk/reward. Too often I was risking 3 or 4 ticks to make 2 or 3 as I was afraid of taking a loss rather than more importantly trusting my read and letting the trade play out.
    I purchased Edgewonk and created a meticulous set of rules and parameters for each setup I take. The statistics in the journal massively helped me see clearly my issue with r/r and created a big sense of accountability of sticking to the trading plan that I currently set out.

    I’m not profitable yet but am clawing back the losses I’ve made over the past 6 months since I first started trading FESX.

    I truly believe having and plan and having accountability of your plan through a good journal can be a game changer and I’m confident of my profitability in the future as long as I stick to the plan.

    @zeficlo

    Liked by 1 person

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