Institutional Equivalent Education?

Quoting n7ekg

Disliked

{quote} That's a good question. I would say, when you're making 90% or more trades that are, at a minimum, break-even (or break-even + 1) trades. Ray doesn't let his interns trade real money until they are consistently making 95%+ non-losing trades. There's always something new to learn. I've been trading for 5 years, and I learn something new every day. I've earned that trading is a journey, not a destination, and it's a mirror for our own fears, our own greed. Nothing wrong with continuing to learn. Ray is always coming up with new and better...

Ignored

Hi N7eg: I think you may be pitching that 95% non-losing trades a little high for the end of internship.
Of course Institutional trades consist of many trade-parts (rather like my preferred style) so in that way it is accurate, but it is misleading to a strictly retail audience!
A figure which would be more equivalent to retail would be 80% to 85% - so yes, if I was a Ray intern, I would still not have 'graduated' - LOL!

P.S. Of course you don't necessarily need a high %win in order to be very profitable. It all depends upon your trading style. I have had several good weeks where my %win was only around 40% ( way down from my >75% target).

Here is the latest email from Boris Schlossberg of BK Forex ( my comments follow the email):


*****************************************************************************************************************************


Dear Ian

Death by a Thousand Cuts is the Best Thing Ever

Imagine you go to bed one day feeling fine, having just set up your algo to super “sensitive” setting that you are certain will generate winning trades and then wake up in the middle of the night -- as you usually do -- but this time unable to move. With the family away in Florida on a winter break, it’s just you and your 12-year chihuahua struggling to make sense of it all.

You are hit with dizziness, waves of nausea and your muscles ache like you’ve been stretched on a medieval rack. What is it? The Flu? Food sickness? Norovirus? In the end, you never really know, but you spend the next 48 hours crawling from your bed to the cool porcelain floor of the bathroom, drifting off into delirium which broken every thirty minutes or so by the ding-ding-ding of your algo making trades. You are just too sick and too disinterested to walk over 10 feet and turn off the machine so you let it trade as you wallow in your misery.

So that was my start of the week. By Thursday I’d finally managed to break the fever and drag myself to the screens to see what happened. I had bet on the idea that the new “super sensitive” setting would get me in earlier into intraday trend moves but instead the choppy FX markets this week whipsawed all my positions, once, twice -- about a million times. It was truly death by a thousand cuts.

And yet this was the greatest thing that happened to me this week.

When all was said and done I was down just 4.5% in my account because of two things. One, I kept my size small. Two, the algo took every stop.

If I was trading this manually I am certain that I would have lifted stops, I would have added to size and my overall loss would have ballooned to a much bigger size. That’s because most traders (and I am not an exception) can’t take more than 3 stops outs in a row, at 7 stops most traders simply give up. We hate the pain. We hate being told that we are wrong and we hate losing money. Over the years I’ve heard every possible elaborate excuse for not taking stops and always the most common argument is that stops are just a death by a thousand cuts. Yes! Exactly. The longer you can stave off the actual death of your account the greater your chance to fight another day.

As I was walking my dog still groggy from whatever virus hit me this week I came across a sign on a church. It was a quote from James Baldwin. “Not everything that is faced can be changed, but nothing can be changed until it is faced.” The beautiful thing about markets is that sometimes they help us crystallize the bigger lessons of life. Not facing stops is simply the refusal to admit that your timing was wrong, your system was wrong, your analysis was wrong. Stops are not the enemy. They are a protection mechanism to help you become better.

I realized that my “super sensitivity” setting was the stupidest decision ever. I stopped the algo immediately and reset the old time tested settings and by end of the week, one of the accounts was already back to break even for the week as both my health and wealth turned for the better.

******************************************************************************************************************************************

While Boris is putting a positive spin on the above, if it was me in that position I would be seriously annoyed with myself:

1. The trader must always take responsibility for their trades, whether those are automatic or manual trades, and whether they are done by a self-built Algo or a purchased Algo. Even when using a a managed account traded by somebody else it is the account holder's responsibility to monitor the manager they hired!

2. The absolute dumbest thing that trader can do is to have an open trade (with no 'hard' Stop Loss) left un-monitored either due to Illness, Vacation, Work or Tech Failure! Boris manages to commit the second dumbest - leaving a untested Algo running unsupervised or one with untested parameters!

3. He was well enough to be walking his dog before he realised how stupid his Algo paramteres were. To me that sounds like he actually deserved to have his account nuked, but avoided it by pure luck!

An interesting 2-part email from Lance Beggs (of Your Trading Coach) , the 2nd part is due next week:

*************************************************************************************************************************************
Hi Traders,

Today, let's discover my GO-TO method for solving trading problems... any time you're stuck. Enjoy!

Happy trading,

Lance Beggs.

My Go-To Method for Solving Trading Problems

The internet is full of problem-solving models and systems.

But here's one I've been using my whole trading career.

It's a simple series of three questions.

A subset of five questions regularly used back in my Aviation days in order to manage risks (only three of the five are usually relevant in the trading field).

http://www.yourtradingcoach.com/imag...problems-1.png

Three simple questions:

1. Can I avoid the problem?
2. Can I reduce the frequency?
3. Can I reduce the consequences?

Putting this perhaps into simpler English:

1. Is there something I can do that will ensure I never even encounter "the problem"?
2. Is there something I can do that will ensure "the problem" won't happen as often as it has been?
3. Is there something I can do such that when "the problem" does occur, the negative outcome won't be so bad?

Most importantly, we're not after vague "touchy feely" solutions.

So I don't want an answer of "I just need to be more disciplined" or "I just need to try harder".

This social media post from last year comes to mind.

We want REAL solutions.

Something actionable. Something measurable. Something testable.

Systems. Routines. Processes. Checklists.

Or anything else technical or process driven in nature.

Let's work through a simple example.

We'll use a question I received on Twitter a week ago:

http://www.yourtradingcoach.com/imag...problems-2.png

Visualising "the problem", it would be something like this:

Attached Image

So how can we solve this?

Rather than me giving my solutions, I think we'll get more value if we make this interactive.

I want to hear some of your solutions. And then I'll share some of them next week in a continuation of this article.

So, given this problem:

1. An inability to trust a rally resulting in continued attempts to fade the rally and grinding my way into a completely avoidable drawdown.

How can we solve it?

Can you find a solution through one, two or even three of these simple questions:

1. Can I avoid the problem?
2. Can I reduce the frequency?
3. Can I reduce the consequences?

Or in simpler English:

1. Is there something I can do that will ensure I never even encounter "the problem"?
2. Is there something I can do that will ensure "the problem" won't happen as often as it has been?
3. Is there something I can do such that when "the problem" does occur, the negative outcome won't be so bad?

Please leave a comment in the blog post - identifying both the question that you're using and the solution. Or send an email to [email protected]

To be continued...

Lance Beggs
*************************************************************************************************************

My comments:
Rather than just wait for Lance to follow-up, I thought I would post some of my ideas now.
This specific problem is is of particular interest to me since I used to suffer form a variation of the same thing.

In my case after missing a good entry long (say) I would often find myself picking places to do a Fade Trade short,
and I would keep doing them until either the trend turned or I suffered a big enough loss to bring me to my senses!

OK, so here is the original chart with my added markings.

If I think back to 'The Market Maker's Model' and 'The Intern's Excercise' aka 'Platform Familiarity' aka 'Scalping Training' - both of which Ray has 'given away' i.e covered in marketing Webinars and/or in the video 'snippets' on the free Compass blog :
www.CompassProptraders.com/blog/

Then using these principles we can clearly see that in the Up Trend the large solid candles ar green - thus market makers are probably pulling their liquidity higher up so as not to be short at too low a price (or else they are standing their ground and being overwhelmed by Buyers). Either way, this only gives us permission to trade to the long side - no short trades allowed!
So using the Intern Exercise we can attack the Weak Holders' Liquidity i.e the stops of the Shorts, all the way until there is either a successful pullback (into the Long's Liquidity), OR there is a long solid Red Candle showing that the Market Makers are now probably avoiding getting caught long at too high a price (or else are being overwhelmed by Sellers).

So my answers are:
1. Add a rule to your checklist to never trade counter-trend unless the trend has shown the signs of reversing - or at least pausing
2. Same answer as for 1.
3. If you absolutely must scalp counter-tr end, then do it using a smaller trade size!

Ray says those are terrible trades - yet I notice that almost every single trade made at least 1 tick profit, and it's a great exercise in learning market structure.

"Sometime soon" is what Compass says. They've started talking it up, so I think it'll be within the next 30-60 days.

Quoting n7ekg

Disliked

Ray says those are terrible trades - yet I notice that almost every single trade made at least 1 tick profit, and it's a great exercise in learning market structure.

Ignored

N7ekg: Thanks for your comment.

You and other students of Ray know that those are (demo) trades and you are talking about the 'After she Goes' level 1 of the Interns exercise - which Ray advises us not to trade in a live account. However I deliberately didn't mark them up or refer to them as trades because there are alternative entry methods possible, so that they could be turned into 'Before She Goes' trades or types of trade taught by other educators.

My intention was just to show that 2 such simple concepts that Ray has already shown to non-students, can be used to almost always be on the 'right side of the market'.

Thanks for the update. Will keep checking.

Is ray the one from Steve Mauro's DMR? as they are both affiliated with compassfx, and is steve mauros MMM still valid till this day?

Quoting hamfish

Disliked

Is ray the one from Steve Mauro's DMR? as they are both affiliated with compassfx, and is steve mauros MMM still valid till this day?

Ignored

Hi Hamfish,
Steve Mauro has not been associated with CompassFx for over 5 years.

The Ray that I mention in this thread is 'Ray de Medici', a Scottish man who has worked for big banks as a trader, then Quant and Strategist for around 35 yrs. He still works in that role for a large Japanese investment bank/broker that most investors/traders will have heard of.
Naturally he has never been involved with MMM.

You ask if MMM is still valid till this day. To me that is a strange question, since A). I found that apart from the 'hit or miss' M and W patterns, the 'Level counts' were based upon unsubstantiated guesswork. B). I went on to try 'the MAX' after MMM and although I still have good things to say about the MAX, I could never find the confidence to trade such an 'indicator heavy' method. I needed to find somebody able to tell me the underlying reason as to why the markets move the way they do and when they do, so that I could have confidence in my analysis and my trades.

What Ray teaches is an equivalent of Institutional Analyst. Strategist and Trader education.
If that sounds like a lot of hard work - it is!
This is both the advantage and the disadvantage of his course, he tries extremely hard not to leave anything out!
Thus after nearly 5 yrs with him I am still learning new things (as is Ray even after his decades at the top levels of the business).
The current Compass offering for Ray is called 'Sharp Edge', don't confuse it with other courses, indicators etc that Compass also offer - it is in a completely different league. Compass offer the other courses etc because the vast majority of would-be traders are not able or not capable of the work required to really master the markets as Ray teaches.

Unless you are passionate about trading and the markets, I suggest you look at 'the MAX' which is a good trend-following, indicator based system with very good results. Unlike MMM it is almost completely rules based, with little room for discretion or guessing. One of the instructors for the MAX is the guy I call 'Mr Carlsberg' after an advertising slogan that beer used to run, because this guy is probably the best retail trader in the world. However that is due to his personal skills and qualities more than due to the MAX system!

While MAX and Ray do sound quite interesting, they both cost ALOT of money for someone who is only in high school, especially MAX with all its different "tiers".

I have noticed although that some traders use some of the concepts from steve mauro such as the stophunt, vector 3, levels, 30 - 90 minutes etc, combined with trendlines instead of just searching for a random M or W at level 3, see attached image.



I'm currently still only learning Steve Mauro's MMM from videos I've found free on the internet, but have only watched his 5 day courses (2011 and 2012 i think) and yet to start his bootcamp.

Quoting hamfish

Disliked

{quote} While MAX and Ray do sound quite interesting, they both cost ALOT of money for someone who is only in high school, especially MAX with all its different "tiers". .......

Ignored

Hi Hamfish,
Yes I can see how it seems that both the MAX and Ray's Sharp Edge seem to cost a lot for a High school student.
However price and value are two completely separate things, especially in the arena of Retail Trader education.

It takes very little time to lose more money by trading either a useless, or an unsuitable method (for you personally, than it would cost to attend a good (suitable) course. Most of us find this out the hard way and many people I know have both lost over $50K trading badly plus spent over $30K on unsuitable or useless courses!
By the way with the MAX if you are going to be profitable in trading it, then you should be profitable even after merely taking the MAX ETF Primer or the ETF Lite course (current cost for both courses combined is just over $1,000) if you like the style of it and it suits your account size.

I have 2 pieces of advice for you:
1. Don't trade until you have saved enough to afford both a a good course that suits your personality, skills, availability to trade and your account size and resources; plus a decently capitalised account ( I would say a minimum of $5,000 for trading SpotFX and more like $20,000 for trading Futures) .

2. While you are saving for that goal, watch all the videos you can by good educators to see which style(s) suit you best. Test them out in a non-live account (called a 'Demonstration' account by MT4 Brokers but also known as a 'Simulation' or a 'Paper' account). Don't risk your hard earned money until you are confident that you can at least make a profit in one of those play accounts.

So which educators videos are worth watching? - Well there are more than you may think, because many educators have one thing that is true and valuable that they show in their videos (usually mixed in with some garbage padding etc.).
Ones in this category are Steve Seidel (of OTA) and Mark Coe (of Peak Experience - another CompassFx offering).
Videos on Market Profile (or better still Volume Profile) are worth watching, as are ones on Levels and any you can find on intrinsic Value.

Obviously it is worthwhile watching the marketing/informational videos from 'the MAX' in addition to all the videos by Ray and even the 'Ask the Student' videos featuring some of Ray's students.
SInce there are no Videos by Ray on YouTube etc, you should go here to find them:
https://www.compassproptraders.com/blog/

For new traders who are pretty much absolute beginners, I put this together as part of a (failed) comprehensive documentation project:

Complete Beginner: The Basics of Trading
Rather than reproduce what is available elsewhere, anyone new to trading either Forex or Futures or Options should go to www.babypips.com/school and study the following sections:
All the Pre-school lessons.
All the Kindergarten lessons.
Elementary School Lessons: Grades 1, 2.
Plus read Grades 3, 4, 5 because you need to know of their existence. However the Prop-Time usage of these will be shown later in this document, because they are either avoided or used in a different way to that taught to retail traders.
Middle School: Read all the lessons, but Sharp Edge usage will differ.
Summer School: These are NOT USED in Sharp Edge.
High School: Read all the lessons, but Sharp Edge usage may differ.
Undergraduate Lessons: Study all the lessons, although Sharpe Edge usage may differ slightly.

Once you have completed all that, you are ready to really start to learn how to trade like an institutional trader but in the retail environment.

For Reference: Screenshots of BabyPips school subjects:

Attached Image (click to enlarge)

Attached Image (click to enlarge)

Here is Lance Beggs' follow-up response to the questions he posed in his prior email (shown in my post number 783 above):

******************************************************************************************************************************************

Hi Traders,

Last week we discovered a 3-Question framework for solving our trading problems. Let's see it in action...

Happy trading,

Lance Beggs.

My Go-To Method for Solving Trading Problems - Part Two

Part One is here if you missed it - http://yourtradingcoach.com/trading-business/my-go-to-method-for-solving-trading-problems/

In that article I presented a three question framework which I use to seek solutions to any of my trading problems.

1. Can I avoid the problem?
2. Can I reduce the frequency?
3. Can I reduce the consequences?

Or in simpler English:

1. Is there something I can do that will ensure I never even encounter "the problem"?
2. Is there something I can do that will ensure "the problem" won't happen as often as it has been?
3. Is there something I can do such that when "the problem" does occur, the negative outcome won't be so bad?

To work through an example, we used a question I received on Twitter a short while ago:

http://www.yourtradingcoach.com/imag...problems-2.png

In other words...

1. An inability to trust a rally resulting in continued attempts to fade the rally and grinding your way into a completely avoidable drawdown.

Visualising "the problem", it would be something like this:

1. Attached Image

   

I then requested your feedback on how you might solve such a problem through either one or all of the three questions.

Well didn't that create a lot of work for me! Ha ha.

I must say I was blown away by both the number and quality of the responses. I am 99% certain I replied to all of them. If I missed yours, please let me know.

Rather than simply listing all of the responses here (because there will be a lot of repetition), I will instead just summarise the main ideas:


Can I avoid the problem?

Is there something I can do that will ensure I never even encounter "the problem"?

This is my first go-to option. If I can find a solution here that is quick and easy to implement, I'll try this first.

This is recognising that often we don't need to address the problem and its myriad of potential underlying causes, if we can just avoid it.

If you get sick eating seafood... just don't eat seafood.

So looking at the problem of a trader who continually destroys their session through fading a bullish trend, how can they avoid it?

Many of you came up with the same idea that immediately pops into my mind for the "Avoid" category:

Don't trade bullish environments!

You said:

http://www.yourtradingcoach.com/imag...problems-2.png

You ask for help changing your mindset. But it's much quicker and easier to:

(a) Accept that this is how you are.
(b) Study your trade history to understand the market structure or environment which leads you to struggle.
(c) And develop clear and unambiguous rules to avoid this structure or environment in future.

In other words, ONLY trade in an environment which is naturally suited to short selling.

And avoid everything in which short selling is a lower probability option.

Maybe something like this:

Attached Image

Or maybe you will have some better idea. After all, you know your trading.

The point is... you need to dig into your trade history. Find and understand the conditions that lead to you fighting a bullish trend. And then set in place rules to avoid them.

Don't try to solve the problem. Avoid it.

Rather than fighting your bias, accept it and embrace it. And maybe specialise in being a short-seller in bearish market environments.

Note what we've done here. The problem still exists. You still have a strong preference for short entries. And the potential for danger still exists if you acted upon this tendency in a strong and persistent uptrend. But you've avoided the problem by setting clear and unambiguous guidelines which seek to avoid these uptrending environments.

We're not trying to find a way to comfortably trade long in an uptrending environment. We're not trying to find a way to improve our skill in shorting an uptrending market. You can work on these later if you wish. First things first though - let's stop the damage through the quickest means available. Identify an uptrending market and stand aside.

Avoid the problem... it's often the quickest and easiest solution.


Can I reduce the frequency?

Don't like the "Avoid" solution?

Ok. That's fine. You won't always find an answer. And you won't always find an answer you like. Let's move on to the other two questions.

Is there something I can do that will ensure "the problem" won't happen as often as it has been?

So here, we're not trying to avoid bullish environments. We're not limiting ourselves to certain sections of the market structure.

We are allowing ourselves to trade in a bullish environment.

But we need some solutions to ensure that when it is bullish, we can (at least sometimes) find a way to align ourselves in that bullish direction, thereby reducing the number of times we find ourselves fading the trend.

Again the responses from readers were spot on, with the following being the main ideas:


Limit to with-trend trades only.

Very closely related to the above solution. But this time we operate with clear and unambiguous rules that limit our trading to with-trend only.

Limit yourself to short opportunity when the trend structure is bearish. Limit yourself to long opportunity when the trend structure is bullish. And stand aside when the trend structure is neutral, sideways or uncertain.

Naturally this doesn't guarantee trading success. Recognition of the environment will not always be perfect. Quick recognition of change of environment will not always be perfect. Execution will not always be perfect. And compliance with our rules may not always be perfect. That's fine. We will deal with this separately if it becomes a problem.

But what this does achieve is that it ensures you will rarely find yourself repeatedly fighting a bullish market.


Trade with a guard rail.

No-one picked up on this solution. But it's one of my personal favourites so I'm going to include it here. I've recommended this to several people over the years, with great effect.

I like clean charts without indicators. But that does not mean I'm against the use of indicators if they add value to your trading. And one good use for an indicator is to provide confidence through placing a "guard rail" at your back

Attached Image

This doesn't seek to avoid bullish environments. And it doesn't prohibit trading short. Instead it acts to increase confidence in holding a long position, thereby reducing the frequency with which you'll find yourself repeatedly fighting the uptrending market.


Multiple Scenario Planning

Always have in mind multiple potential paths for price action. Ideally at least one bullish and one bearish scenario.

You're fighting the uptrend because you believe it should be moving lower. But have you actually viewed the charts too see if there is the possibility of a bullish scenario?

Assuming the market had a chance of going up today, what could it look like?

If you have pre-accepted multiple scenarios for potential price movement, and at least one of them involves price moving higher, you're more likely to recognise and accept the bullish conditions when they occur and more easily able to align yourself in that direction.


Trading level to level

Overlay the higher timeframe market structure with an S/R grid and use that to define the general market bias as price moves from level to level.

Again, this works like the idea of multiple scenario planning, discussed above. It's harder to get stuck in a mindset of "this market should be moving lower" when you've defined clear levels and have accepted that the market is bullish while above certain levels.


Limit counter-trend short entry to key levels only.

Extending the idea above of trading level to level, this now also gives us a solution for how we can still trade short against a rising uptrend.

Limit that sort of trading to ONLY the times when price interacts with one of our higher timeframe levels.

All other action, away from these levels, is limited to with-trend (long) opportunity.


Overwhelm yourself with study after study of bullish market environments.

One response suggested reviewing 100 days of uptrends. Ha ha!

Absolutely yes. This will leave you in no doubt about the fact that markets can and do go up a whole lot more than you expect. It's a beautiful solution.

What is good about the 100 charts solution is that it goes a long way to correcting the faulty underlying beliefs, leading the trader to somewhat accept the idea that markets can safely rally. And while you may at times slip back into old habits of fading the trend, the frequency of occurrence will be reduced due to the many times now when you find the confidence to go long with the trend.


Operate with multiple independent methods of assessing bias.

No-one guessed this solution. It's one of of the ones I came up with, which I think could be effective in limiting how often you get stuck fighting a trend.

I assume that you're operating at the moment with two means of identifying the potential future movement of price - some form of assessment of the trend PLUS gut-feeling. And in your case the gut-feeling is over-riding the trend analysis.

Maybe try increasing the number so that you have three or more independent methods of assessing bias, one of which might still be gut-feeling. Perhaps add some market internals, or VWAP, or a higher-level orderflow tool like cumulative delta. When a majority of methods are suggesting a bullish bias, this may give more confidence in trading in this direction and ignoring the gut feeling of "it should be bearish"


Operate with multiple independent methods of assessing bias AND a measure of confidence.

Taking the above idea one step further, why not add a degree of confidence to your gut-feeling.

We previously discussed this idea as it relates to price targets - http://yourtradingcoach.com/trading-process-and-strategy/applying-a-degree-of-confidence-to-price-targets/

It applies just as well to your bias.

"Ok, I feel like it should be going down... with maybe 60% confidence... but given all the other methods are suggesting bullish then 60% is clearly not enough. I'm trading with-trend."

Turn the chart upside down.

I didn't expect this response but ended up getting it twice.

I actually tried this myself several years ago. Like the reader who posed the question, I also have a preference for short trades. Not to the same extent where it damages my edge. But it's simply a case of short trades feeling comfortable while anything long is really uncomfortable. Even to this day. It just doesn't ever go away.

Back in the days of Ninja Trader 7, I came across an indicator which flipped the chart upside-down.

Perfect. Problem solved. Whenever there was a bullish market, I'd simply shift my focus from my normal chart to the upside down chart, so that it looked bearish.

It works surprisingly well. I could take a long position in that uptrending market, and hold it quite comfortably, simply because it looked like a short position in a down-trending market.

Unfortunately though, I couldn't execute from the chart. So I got rid of it and went back to normal charts.

But if you have a different platform which offers the ability to flip charts, or someone who can code a solution, this might be an option for you.


Can I reduce the consequences?

Is there something I can do such that when "the problem" does occur, the negative outcome won't be so bad?

Again we don't seek to avoid bullish environments. And this time we don't want to limit our ability to short an uptrending market.

But is there some way we can do this more safely, such that the damage incurred will be less in those times we do get it wrong?


Reduced position sizing for counter-trend setups.

Not necessarily a permanent solution. But perhaps one you can use temporarily, until such time that you can improve your skill in timing a counter-trend short entry.

Cut your size to the absolute smallest allowed in your market.

Continue to monitor stats and the impact these setups have on your edge. If you can't develop a positive edge, you will eventually need to abandon them. But until you've accepted that once and for all, cut the size to ensure smaller losses.

You can always increase again if you improve in skill to the point where these trades are providing a positive input to your edge.


Limit counter-trend drawdown to a fixed number of losses.

I've talked about my personal rule before: When two trading ideas fail to work, I consider the need for a break. When three fail to work, I force a break. Either I'm wrong about the market bias, or my execution is poor, so I have no business trading. Take a break. Walk away. Do not come back till your mind is clear and the structure and conditions have shifted to something more tradeable.

If you can do this, the consequences of fighting a market bias will be reduced to (at worst) three losses.


Better counter-trend entries... closer to the stop.

There was only one response which suggested this. I like it.

It attempts to limit the consequences of fading a persistent uptrend through bringing your entry price closer to your stop. Maybe this will be enough to bring these sequences closer to breakeven or small profit.

The suggestion was that, rather than using your entry signal as a trigger to place a MARKET or STOP entry order, you use that signal as a trigger to place a LIMIT order higher. You're fading the trend. There is a good chance of some retrace. So try to take advantage of it and improve your entry price.

As with any of these "reduce consequences" options - they're still allowing you to trade in the environment that was causing problems, in the direction that opposes the market bias. So you need to monitor stats and track the impact this has on your edge. As mentioned above, if you can't get this to provide a positive edge then you seriously need to abandon this idea of trading counter-trend against a bullish market.


Wrapping Up

So there we are. It really is quite simple.

In the majority of cases all we had to do was come up with a set of rules to limit our ability to short an uptrending market. The markets offer incredible freedom to enter and exit at any time of your choosing. Successful traders place limits on this freedom, to ensure trade decisions have the greatest chance of providing a positive edge.

For the trader who sent me the original question: Your path from here is to identify the potential solution (or multiple solutions) which you feel may best suit your needs. And test it. Implement the idea through a trial period, tracking the results to confirm whether or not it was effective.

For everyone else: The point of this was not to provide you with techniques to limit the damage from constantly selling into an uptrending market. Rather the point was to demonstrate the problem solving framework in action.

And given the number and quality of responses I received, it's clear that many of you have seen how easy it is to come up with solutions.

That is where the three questions help. They provide some structure to your decision making, taking you from "stuck" to at least having some idea of where to look.

This works not just with "I keep getting run over by an uptrending market". You'll find it helps with many problems throughout your trading career. So whenever you're stuck, ask:

1. Can I avoid the problem?
2. Can I reduce the frequency?
3. Can I reduce the consequences?

Sometimes, depending upon the type of problem being solved, you'll find some overlap between the "Avoid" and "Reduce" categories. You might have felt that with the solutions presented above. If you feel a solution that you come up with fits best in the "Avoid" category while I put it in one of the "Reduce" categories, that is fine. Either way the three-question framework has led you to a potential solution. That is all that matters.

Happy trading,

Lance Beggs
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If you aren't willing to drink your own pee - don't trade

Have I gone crazy? - No, its another weird email from Boris Schlossberg - LOL !
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If You Aren’t Willing to Drink Your Own Pee – Don’t Trade


“Never depend on those luck moments -- they are gifts -- but instead always build your own back-up plan.”
— Bear Grylls
“Look, sometimes, no matter how hard you try, sometimes you need a bit of luck.”
— Bear Grylls

A trader friend of mine posted these two statements by Bear Grylls on his Facebook feed trying to point out the often contradictory things that people say.

But I looked at those statements as instantly posted, “Moral of the story -- unless you are willing to drink your own pee don’t trade!”

My snark received more a few laughs, but I was actually dead serious.

I am a huge Bear Grylls fan. I’ve watched all the shows. I’ve seen him drink his pee in the desert, swim naked in ice-cold waters of the Arctic and bury himself in the snow to survive the night. Here is the thing. Grylls didn’t do any of these things because he liked them but yet he did them willingly -- more than willingly -- joyfully because he knew that there was a greater psychological truth to his actions that would result in his survival.

Last week I told you I was bitten by some mysterious flu/stomach/norovirus combo that basically had me crawling on the bathroom floor for 24 hours straight.
Now prior that incident I drank 10 cups of coffee per day. That’s about 70 cups of coffee per week.

Ask me how many cups of coffee I had this week?

Two.

Now if you were to tell me two weeks ago that I would be drinking less than one cup of coffee per day and sipping hot water with lemon for the other 20 hours I am awake each day, I would have laughed you out of the room. I don’t drink. I don’t smoke. I don’t even eat fatty or sugary foods. But the one thing I was certain of was that I was a caffeine addict. And yet here I am perfectly fine. No withdrawal symptoms, no headaches, no irritable behavior and most importantly no coffee. (Sidenote -- wow did I burn a lot of money on coffee!)

Why was it so easy to stop? Because there was a greater psychological truth to my actions. Post my illness my stomach simply can’t handle any irritants at all so giving up coffee was easy because it made me feel good.

Psychological truth ( something that seems true to YOU rather than being objectively true) is the single most overlooked aspect of trading. I realized that last week when I came back from my battle with the germ gods and looked at my trading system with a fresh pair of eyes.

I had designed my systems with the best possible logic and the most robust empirical evidence there was and yet I found myself overriding the system more and more frequently. Why? Because my psychological truth is to take profits early. I don’t care about giving 300 pips of possible profit. I care about not losing the 15 pips of certain gain. There are some traders who love the long ball and some who like to grind it out with base hits. I am definitely the latter type of player.

So instead of trying to fit myself to the system, I decided to see if I could make the system fit me. I asked myself what is the shortest possible take profit that would satisfy me, allowing me to trade the system to trade without interference. Then I adjusted the parameters to make mathematical sense within the new structure. I didn’t make one single change to my logic. I simply adjusted the odds to suit my personal behavior. I aligned the mathematical truth with the psychological truth and the end result was 22 trades without interference and a net positive week at that.

Now I am looking at the longer term time frames with the same mindset, adjusting the edge to fit my personality, rather forcing myself to trade to someone else’s idea of risk stricture. I am pretty certain that next week my longer term strategy will trade much closer to its intended plan. Align the mathematics with your personality and I bet the same will happen to you.
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My comments:

1. I really can't see that Bear Grylls has anything to do with trading. Alright, you have to survive in trading but survival in trading is around 99% psychology (provided you have a system/method that works overall).

2. I can't understand how big a dumbass Boris was before he got sick - these insights he now says he's had about his trading should be obvious to anybody who has traded for more than a few months. You shouldn't need to get sick in order to see thinks that are so obvious!

3. It all comes down to 3 facts that I have been mentioning over the last 2 years or more:
A). Choose your trading style, market and timeframe etc. to match your personality, your resources and the times you are available to trade! If you don't do this you will always trade badly (or worse than you could) ! This is why 'the MAX' doesn't work for me even though it is an extremely good system. When I try to trade using the MAX I am self sabotaging - it just doesn't fit my personality. Similarly if I try to scalp. I need 'intrinsic' or at the very least 'relative' value at my back when I trade - that is the way I am wired.

B). For me the secret to good trading psychology is just a case of designing my Trading Plan(s) and my Money/Trade Management around my own psych weaknesses - so as to compensate for them and thus make my trading easier and less stressful. The same should be the case for every trader. It is so flaming obvious - any sane person would either make something that is naturally stressful and difficult, as easy as they could - or else just avoid it!

C). Although we tend to think we know how we would feel under different circumstances, we can't really know unless we experience that situation. Often we find that under adverse circumstances we are not as calm and rational as we may have previously thought we would be.
For example a Stockmarket investor might say they will hold cash in reserve awaiting a 30% drop in the stockmarket for them to buy cheap stocks. However when such a situation actually happens, they may feel too nervous to risk more money after taking such a loss and with all the media and commentators being pessimistic - unless their name happens to be Warren Buffett.
So a trader or investor needs some setbacks before they can really plan for how they will react to future situations, thus they should always plan for things to be at least 50% worse than they could possibly expect or imagine!

Since Compass are talking up the chances of Ray doing at least an OrderFlow course soon, I think it is a good idea to mention what I consider to be unofficial prerequisites for Ray's full course:

(From one of my posts last year: )
I know there are a few (very few) people who find this thread, or find Ray's Sharp-Edge course without already having much experience in trading. For them the education section of Babypips ( www.babypips.com/learn/forex ) is a good resource, however like all retail trading education it isn't all good or useful.
So I wrote a document about which parts of it were good preparation for Ray's Sharp-Edge course. Note that the Babypips website has had a 'new look' since then, but I think that the documentation is still the same.


Now something about the process of actually learning to trade the Sharp Edge (Ray) way.
One of my Self Help Group members posted this (in our Self Help Group 'knowledgebase' about 4 years ago) about his personal journey:

Confessions of a Chronic Trading Student by G... B.....
Part One
I took up trading (or should I say "learning trading") 5 years ago at the age of 45. I had been a financial analyst for 20 years specialising in debt structuring for real estate investors. A major change in my real life family situation meant I had to find a profession/income which would allow me to work from home and at whatever time I had available. I had already given up my business due to this change and my financial reserves were starting to diminish.
A close friend then introduced me to the world of Forex. He was a part of a group who developed EA's for the retail market but after blowing up a few demo accounts I quickly decided EAs weren't for me. One of my earliest mentors had taught me that the first rule of investing was "Always keep control of your money" and this had always seemed like good common sense to me. So I wasn't about to let some computer program (EA) piss my hard earned money down the drain. If I was going to do this it had to be my mistakes, my successes ....my responsibility.
I started doing every retail course I could get my hands on that didn't cost very much. I had very little in the way of surplus funds so I had to make as much use as I could of the "Free Webinars". As anybody who has been through all the promisses of the FX Marketers out there knows, once you get on someone's mailing list, the offers of 'this course' and 'that webinar' start rolling in. Every one of them was going to make me successful/rich. Most of it as I now know is just crap.
The only two times I paid GOOD money was for a Steve Nison course to learn about candlesticks and an advanced Fibonacci course .....please don't tell Ray ...lol.
Every time I thought I was ready to start trading, along would come another concept from another free webinar and I would delve headlong into another bout of learning. This would end up going on for 4 years. I had become a professional student.
This constant influx of emails inviting me to become wildly successful by attending this course or that webinar, was not all a waste of time ...... as ..... very early on I came across ...... Dean Malone. He was speaking in one of those multi-speaker webinars and I immediately took a liking to his TDI indicator. In fact I've had it on every one of my MT4 charts right up until I started the Prop course with you guys in November (and discovered Sierra Chart).
This leads me to the last few months. I was driving myself nuts jumping from strategy to strategy, marketed by people who probably couldn't even trade. My old friend -"common sense"- finally hit me in the head and slapped me across the face. I'd spent about 4 years learning how to follow the rules of so many systems and react to different indicators (which of course were mostly lagging) ... BUT ... the one thing I didn't know was ... WHY? i.e, WHY does the market go up? WHY does the market go down? Why, why, why??? After all, you can't be a doctor, diagnose patients, plan their treatment and implement it, if you don't know how the body works. You can't just open a textbook and follow the rules.
So, being on Compass' mailing list for 4 years, I heard about the first Prop course early last year. I couldn't really afford it but what Ray was revealing in the free webinars really piqued my interest. Here was a guy telling me "How and Why". I went to every free marketing webinar .... every one. Just the constant re-inforcement of all the education Ray was giving away for free already gave me a far better understanding of the markets. I continued to repeat this when each new Prop course came up until October when Compass was marketing for the November intake.
For me now it was not about the fact that I couldn't afford it. It was now a question of "Can I afford NOT to do it".
I already new I loved this business. I would be at my desk in my home office at 8am every morning and at around 2-3am the next morning I would have to force myself to shut down the computer and go to bed. (I'm in Australia) Having a financial background I knew I had the mind to cope and understand the analytical and planning side of this business. (Whether I can become a successful trader? Only time will tell.) One thing for sure is that I have made a total commitment. There is no going back for me. I've never enjoyed anything more - business wise - in my life.
I blistered the credit cards last October to take the big step and I'm still here and I'm still loving it. I'm actually leaning towards becoming a swing trader so I'm not sure I will always do the long hours in the live room, but I do believe the principles we are learning will stand me in good stead, no matter what time frame I settle on. I also know that if I can prove my competance, I can always raise a bank.
I've really enjoy the interaction and comradery of the Compass group and this private group and I hope to be a participant for a long time yet. Who knows, someday I may even get good enough to really contribute in a positive way, instead of just sucking up all the wisdom so generously offered by all you more experienced operators.
So, thanks for everything so far.

Part Two
How to learn this?
Analysis Paralysis (aka Information Overload) is a terrible psychological affliction. Having so much running around in your brain that all you're doing is getting more and more confused and subsequently agitated. “I've learnt all this great stuff. Why can't I sit down and easily make it work?”
I have decided to retreat to “common sense” to give me the answers I need and find a solution.
The first thing I realised was that “all this great stuff” is TOO MUCH great stuff for someone like me who is new to these concepts. (No matter how intelligent I think I may be.) I was still playing with Fibs up until November.
The second thing I realised was that I needed a PLAN. A plan that I could methodically follow from Start to Infinity ( We all know that you never stop learning in this business so there is no END.) I sat down with paper and pen to make a list of subjects we had learnt about in the course. I know a lot of topics can be grouped together based on their relationship to one another but in ten short minutes I was already up to 38 different subjects/topics and I knew I could go on. Looking through all the recordings in here and the Compass Live & Resource rooms I found an abundance of topics to consume..... TOO MANY …. for someone at my stage of this adventure.
So ….. where to start?
“The Basics” …. I heard Mr Common Sense scream out at me. What are the basics I need to master to at least be able to begin trading. The only trouble is that what might be the basics for me, may not be the basics for someone else. So this is a topic that should make for good debate in this group (Self Help Group) , (and screams out for advice/comment from the experienced people among us)
My condensed list of headings for the Basics reads something like this …...
Fundamentals/Bias
Money Management
Time Management
Price Action & Market Structure
Trade Types
“Everything Else”
I know each of these topics can be split into many sub-topics and it must obviously be up to the individual as to where he/she thinks it would be best to start. For me personally …... I have a good grasp of the basic Fundamentals and Money Management. With Time Management I am referring to the organisation of my own time to learn everything. “Everything Else” encapsulates all that “Too Much Great Stuff” I referred to above. So I'm going to start with Basic Price Action / Market Structure and Trade Types.
For Basic Price Action & Market Structure I have singled out a few important topics to concentrate on. These include …
Levels & Liquidity
Finished & Unfinished Business / Acceptance & Rejection
Balance & Value
Volume
Directional v Compression.
With regard to Trade Types we all know there are many. I've just picked a few which resonate with me and I'll start with those......
Pivot Stop Run
ERF
3LL
ART
PCL & PCA
My Plan at this stage is to take these Basics (one at a time from each of the two areas above) and concentrate on them until I feel comfortable/confident/competent (CC&C). I'm going to watch all the recordings on them and then spend considerable chart time on them. And I'm not going to move on until I'm CC&C. I've only got 24 hours a day to work with, so it's going to be tough ….... lol.
I've already started on Levels and Liquidity and since Sunday I have watched quite a few of Ray and Mark's recorded sessions. As I'm ploughing through each topic I will post my recommendations here in this (Self Help Group) Hipchat *Now Slack* room for the recordings I feel have helped me the most. I would of course welcome any other recommendations from members if they have a certain favourite. It can only help the rest of us.
NB: The coming Training Modules *Now superceeded* will obviously be a great help in this regard.
With regard to the Trade Types category it's a little complicated as most can be related to another, depending on the circumstance. As above, I will be picking one at a time, watching the recordings and then spending chart time recognising them.
When it comes to Time Management, every individual will need to find a way to best utelise their available time to achieve optimum results. For me personally I have committed everything. At 50yo I'm far too young to be married and have kids ( lol ) and the only major commitment I have is to live with and look after my 83 year old Father. I will confess that in the past I have spent too many hours in front of my screens and this has contributed to my Analysis Paralysis and subsequent low level psychological burnout. So from this point forward I am committing to some regular “down time” to refresh the mind.
I've also taken the pressure off myself with regard to trading so until I finish covering my planned Basics listed above, I will not be trading. As I'm in Australia, Ray's briefings *Now Tweets from SmartAlpha* are at 9.00am my time so I will of course be attending them but when it comes to the US session starting at 11.00pm my time ….. I'll see how I feel on a day by day basis. I can always watch the recordings the next day if there's a gazetted topic that Ray taught during live trading. At this stage I'll commit myself to the recordings and chart time relevant to my subjects above. This is of course going to take time. A month, two months, who knows. My priority is to get it right and feel comfortable/confident/competent. I've got the rest of my life to trade. I figure the worst thing I can do is hurry the process. (Been there, done that!)
On top of all this is the fact that another Prop Class *Now called Sharp Edge* will be starting next week. I'm certainly going to attend all the classes at 3.00pm ET as it will be 6.00am my time and I've been looking forward to the refresher in the major subjects. If it’s anything like Novembers Class the first 2-3 weeks will contain all the major subject lessons. Again, I'm not going to commit to the NY sessions unless we are advised that something important is on.
My Time Management will of course probably not suit your Time Management but I urge everyone in a similar situation to me to at least try to make your own Plan.
My initial Goal through My Plan above is to achieve a level of CC&C which will allow me to step into the market and begin trading on a regular basis. I will need to prove this to myself over a reasonable period of time before I try to become an expert in all the other Good Stuff.
As alluded to earlier, everyone will need to formulate their own plan. I’ve just tried to explain the thought process behind developing MY Plan. I would welcome further discussion and contributions from those of you that this resonates with. I would also welcome and appreciate any wisdom/comments/advice/criticism/recommendation from the experienced Traders in this group. It will be most appreciated. Plans should be flexible so I’m always willing to alter mine based on good advice.
For the Newbies/Novices and less experienced Traders like me, I urge you to make use of this great resource and the generous people in it. I feel fairly certain there will always be someone around to help if we need it.
I would like to thank David and Peter who have both contacted me privately to offer their wisdom and some advice.
Here’s to the next step in our great adventure.
I can’t wait.
G....

And some more general stuff about learning - and why it is quite a different process when it comes to Ray's Sharp Edge course.
(Again this comes from our Self Help Group 'knowledgebase'):

E... C... posted this link in the PropTime Trade Group Skype: https://getpocket.com/explore/item/the-secret-algorithm-behind-learning

It is good in principle, but has a major fault in that not all subjects can be taught to an 8 yr old.
Fermat's last Theorem - any volunteers to teach that to an 8yr old? Many of the best mathematicians had failed to prove that for hundreds of years - LOL!

Well I think that the same sort of thing applies to Ray's teachings, even the simplified stuff (i.e. without the advanced statistics etc.) that he teaches us! How many 8yr old kids have the attention span to be able to learn even some of his simpler subjects? Kids have problems understanding money (as do some adults) never mind understanding Financial markets.
No, in our case the way to learn it is by doing what I , Sam D. , Jason M. , Nic L. , Vanessa H. and others have been doing:
Find a small subject that you think you understand, document it for others who are having trouble with it. Put you document out to your fellow (Self Help Group) members for review and criticism. Then improve it and put it out again and keep cycling around until it is almost perfect (nothing is ever 100% perfect except Pure Mathematics).

I have been asked by CompassFX if I will attend and participate in a discussion about trading at 11:00 Eastern Time on Saturday 9th March.
That is this weekend.
I don't really have anything in particular to say that I haven't said several times before, so I hope there will be some questions.

Live “Real Trade Talk Session” Saturday March 9th at 11:00 AM EASTERN

Registration: http://compassfx.webinato.com/register/15391551918373

There are 5 of Ray's students currently lined up to talk and answer any questions at the 'Real Trade Talk session' above.
In no particular order they are : Ian Foster (me)
Cliff C.
Nicholas - I don't know which one, since there are several students called Nicholas
Ed - I think this is Ed C. but there are several other students called Ed
David T. who will be talking about how he used Ray's Sharp Edge training in order to build his OFten order flow indicator suite in Sierra Chart.

Since I have previously spoken about my trading journey, how I trade (my resources), matching trading style to personality and matching money /trade management to personality and resources. I hope to just be answering any questions the audience may have, but I am sure I will find something to say in the event of there being no questions.

Would there be a recording?

Yes.