A Good System Relies On A Robust Trading Process, by Gabriel Grammatidis

Gabriel's PhotoA few years back I started teaching a 3-day Forex Systems Workshop based on three systems I actively trade. The systems use a simple and precise set of pattern-based rules so even novice traders can adopt the systems fairly quickly. If you trade systems based on visual pattern recognition, you need to learn to identify these patterns. With some experience, traders are able to discern a very good pattern from a below average quality pattern. The human brain is wired towards successful pattern recognition and the subconscious mind (right brain) is very good in this. Still, there is some learning required to teach your brain with pattern examples. This situation compares to professional chess players who build mental libraries of memorized play situations.

Typically, attendees left the workshop with lots of enthusiasm to implement the three systems. The workshop included practical trade examples (screenshots) and live trade simulations (based on historical price data) so that students learned to recognize the chart patterns and apply the rules. I believed that this was what students needed to successfully implement everything back home. That was true — but I found out later — only true in part.

Professional traders reported that they were able to trade the systems consistently profitable within 1-2 months of attending the workshop. A good part of other students, however, reported that they were confronted with some physical and mental challenges and they got stuck in their implementation. Some people even mentioned that they ended up not trading the systems at all. Why were the results so different? Clearly, something was missing for some people!

If you have ever attended a trading workshop, you might have experienced something similar. What seemed so obvious and easy at the workshop now seems difficult back home with the subtleties and the details of trying to get the systems to work. As an instructor, I had to learn that understanding the rules and being able to recognize the visual trading patterns in the classroom are different from being able to actually execute trades at a monitor some time later.

I came to understand that for some traders, learning the “rules” alone did not complete the full picture. I realized that these traders were missing a complete Trading Process. Over several years, I had developed my own processes supporting my trading. As this was a gradual development process, I only began to understand over time how important it was for my results. Now I would say that your trading process is as important as the systems themselves. I am convinced now that without a good Trading Process, many people will have trouble trading any system efficiently in the short-term. With time, though, everyone can develop their own process. Students will be successful sooner at home using a robust & efficient Trading Process from the start along with good systems. Obviously, full time traders have already created their own process which makes trading a new system easier and a faster experience than for novice traders.

Your Trading Process

What does a Trading Process look like and what are some of the activities? Traders are different and they develop their own routines to fit the needs of the systems they trade but here are parts of the Trading Process that everyone probably needs in some way:

a) Morning Preparation Process:

This is probably the most underrated activity for most novice traders. It is very important to get you into an ideal mental state for trading similar to how an athlete prepares for peak performance in competition. I focus on achieving a high consciousness state of Acceptance (well beyond anger and fear). Such a state makes it much easier to attain peak trading performance. Van teaches several ways to do this in his courses and workshops and I use my own variation. Experiment to find what works for you.

b) Higher Timeframe Analysis:

The entry chart is not the only chart to look at. Analyzing several higher timeframes (multi-timeframe analysis) will provide you important additional edges — especially if you trade the Forex market. Think about what you need to look for to add additional edges from the higher timeframes. There are multiple factors. For example, entering a long position that is supported by an uptrend in higher timeframes gives you an edge. In addition, determine stop-run levels, dynamic & static support and resistance levels and other important factors on those higher timeframes. This top-down analysis allows you to determine if a day trade has potential to transition into a swing trade possibly lasting for weeks or even months.

c) Short List Generation:

There are always good trading opportunities in the markets in several timeframes on any given day. How do you identify the best ones without getting confused or stressed out and then consequently drop into a mental state that is no longer good for trading? You want to end up with a short list of the best opportunities quickly. Think about applying certain activities that include rapid pattern detection, priority examination, and some filtering and elimination techniques. Initially, this will require a good amount of conscious effort (comparable to learning how to drive a car for the first time) but with some experience, you will execute this step quickly.

d) Opportunity Scanning:

Your scanning should be fast and efficient. It should prevent you from missing out on good trading opportunities and support you in minimizing your trading mistakes. I have found certain ways you can best utilize the unconscious mind so that patterns pop-up in front of my eyes with little or no conscious effort. In addition, organizing the charting platform with certain scanning templates helps a lot in my style of trading.

Use Your Trading Process to Capitalize On Your Edges

Trading systems taught in workshops already provide you multiple edges in the markets. To fully capitalize on those, however, you also need a robust Trading Process that works hand-in-hand with the trading systems’ rules. This combination makes trading much easier and makes your trading profitable sooner.

Good trading,
Gabriel Grammatidis

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