I recently had a two hour one -to- one session with Paul Wallace. I met Paul at a meetup group he runs in London UK called The London Traders Network. It is a free event where retail and occasionally institutional traders can meet up and swap war stories, have a few drink and share ideas. For most of us who attend these events have been a real godsend. It's such a simple thing but as we all know this is an extraordinarily lonely job and actually being able to chat to people once a month who understand the jargon we speak in is a real boon. For more information on Paul please visit his websites... http://fxtraderpaul.com/ and http://www.tradingbeliefs.com/
THE SESSION
On Coaching...
In Paul's own words his coaching is about "Evolution not Revolution", meaning he is not throwing all your work out and starting afresh, but rather working on making sure you understand your strengths and weakness and then helping you play to the former and eliminate the later. Also towards the end of the session he mentioned the following, "humans usually do more for others than they do for themselves" this I think is very true of myself. His point being that as a coach he is an "other" and the work that I will not do for my own trading I will do for him, making me accountable and more driven.
On Goals: Relative and Absolute...
To Paul it is incredibly important to set yourself the correct goals, he defines them as "absolute" and "relative". Absolute being the usual ones newbies set themselves. For example a large amount of money, a mansion, even in terms of pips, say setting yourself a goal of 2000 pips a week when you're currently making 100 pips per week. etc. His point is absolute goals can actually work against you as they are often quite un-achievable to where you currently are. Instead of being motivators, they turn into failed yard sticks that can then be used to hit ourselves with. Relative goals on the other hand are relative to what you are doing now, they are more or less achievable to where you are currently. For example if you are currently making 100 pips a week, trying for 110 pips next week is a relative goal as it is based off the reality of where you currently are. Doubtless you have guessed these are the goals he advises using. To paraphrase Paul, "it's just about getting a little bit better each week".
On Preempting Burnout...
1. Poor records, 2. overtrading, 3. self comparison are clear warnings of emotional burnout.
4. Fact: Intraday Traders need regular breaks: there should be a couple of 3 day weekends in each month and regular screen and market holidays throughout the year.
On Success...
What I write here is undoubtedly related to me as we all have our own ideas of success and Paul was working with me and my ideas... What became apparent was that I know that trading success is managing risk, keeping losses small and letting profits run BUT I have true internal conflict likely from the years of amateur boxing that I did. The internal conflict being that deep down I truly see success as winning every trade, due to my innate competitiveness. This has been incredibly detrimental to my trading because I have only looked at my P/L as an indicator to my success, and as we all know "you can make money badly" IE getting risk reward ratios of less than 1:1 just to show a winner in your account. This is something I have certainly been doing, to appease my need to be right. And we can "lose money well" IE risking 10 pips to make 50 pips. Paul concluded that I need to redefine success as; Plan the Trade, Trade the Plan , Manage the Risk = an execution bias based on a mechanical trading system. This will shortly be reflected in my trade journal where there will be a performance (£P/L) score of each trade but also an execution score for each trade of how well I followed said plan.
On Work To Do...
1. Written Trade Plan (a la Checklist style, that even my mum could follow)
2. Business Plan (execution driven not outcome/cash driven)
3. Goals relative to what I am doing/ achievable rather than absolute = motivated and inspired rather than a stick to hit myself with.
4. Journal both P/L and Execution and "Force (my)self to write what you have learnt from each trade"... Paul is sending a XL spread sheet template for me to download.
5. Paul also recommended Alexander Elders "come in to my trading room" and getting the rest of Curits Faith's books.
On Mechanical Trading "Ambiguity in a fast moving market is going to kill you"...
create a step by step plan even your mum could follow.
Trade more than one currency up to 6 pairs ideal EU,EJ,GU,AU,UJ...
Use heat maps and correlation weekly to find volatility
Trade times 0630-1030 = 4 hours. Can also trade US session but only if EU session went well
3 losing trades in a day, stop trading for day
Keep it simple
On Truths QUOTES...
"Your risk profile defines/affects your attitude to risk and entries"
"FBTs (fear based traders) need rules and precision particularly on entries"
"There will always be clusters of losses"
"RRR 1 - 1.25 is perfectly acceptable in intraday trading."
"43% hit rate and a 2:1 RRR; you've got a business"
"Ambiguity in a fast moving market is going to kill you"
"20% of your wins will run straight into your PT"
"traders get paid to manage risk, Analysts get paid to make the right call"
"your first loss is always your smallest": If you are intraday trading (whether you like it or not) you are a momentum trader. No movement after an entry = no momentum. Like a surfer if there's no wave or miss time it you're not going anywhere. Don't wait for stop to be taken out for a full 1% loss, if it doesn't go your way after 3 bars, close it. If it takes off afterwards get in on a re-attack.
Map to success: S.A.P. Survive, Aquire, Prosper.
UK and EU IR have created better moves than NFPS recently
On Testing: Forward/Back...
If you are going to (insist) on backtesting, do so to pick holes in your approach not to cherry pick all the best trades and give yourself unobtainable success to achieve.
Forward testing is Paul's preferred method he recommends a 50 trade sample size for accuracy, samples may fail to produce positive P/L "BUT something will come of it(them)"!
On Entries and Stops
I use HOLP and LOHP as entries this is fine but I may well be able to tighten my stops
THE SESSION
On Coaching...
In Paul's own words his coaching is about "Evolution not Revolution", meaning he is not throwing all your work out and starting afresh, but rather working on making sure you understand your strengths and weakness and then helping you play to the former and eliminate the later. Also towards the end of the session he mentioned the following, "humans usually do more for others than they do for themselves" this I think is very true of myself. His point being that as a coach he is an "other" and the work that I will not do for my own trading I will do for him, making me accountable and more driven.
On Goals: Relative and Absolute...
To Paul it is incredibly important to set yourself the correct goals, he defines them as "absolute" and "relative". Absolute being the usual ones newbies set themselves. For example a large amount of money, a mansion, even in terms of pips, say setting yourself a goal of 2000 pips a week when you're currently making 100 pips per week. etc. His point is absolute goals can actually work against you as they are often quite un-achievable to where you currently are. Instead of being motivators, they turn into failed yard sticks that can then be used to hit ourselves with. Relative goals on the other hand are relative to what you are doing now, they are more or less achievable to where you are currently. For example if you are currently making 100 pips a week, trying for 110 pips next week is a relative goal as it is based off the reality of where you currently are. Doubtless you have guessed these are the goals he advises using. To paraphrase Paul, "it's just about getting a little bit better each week".
On Preempting Burnout...
1. Poor records, 2. overtrading, 3. self comparison are clear warnings of emotional burnout.
4. Fact: Intraday Traders need regular breaks: there should be a couple of 3 day weekends in each month and regular screen and market holidays throughout the year.
On Success...
What I write here is undoubtedly related to me as we all have our own ideas of success and Paul was working with me and my ideas... What became apparent was that I know that trading success is managing risk, keeping losses small and letting profits run BUT I have true internal conflict likely from the years of amateur boxing that I did. The internal conflict being that deep down I truly see success as winning every trade, due to my innate competitiveness. This has been incredibly detrimental to my trading because I have only looked at my P/L as an indicator to my success, and as we all know "you can make money badly" IE getting risk reward ratios of less than 1:1 just to show a winner in your account. This is something I have certainly been doing, to appease my need to be right. And we can "lose money well" IE risking 10 pips to make 50 pips. Paul concluded that I need to redefine success as; Plan the Trade, Trade the Plan , Manage the Risk = an execution bias based on a mechanical trading system. This will shortly be reflected in my trade journal where there will be a performance (£P/L) score of each trade but also an execution score for each trade of how well I followed said plan.
On Work To Do...
1. Written Trade Plan (a la Checklist style, that even my mum could follow)
2. Business Plan (execution driven not outcome/cash driven)
3. Goals relative to what I am doing/ achievable rather than absolute = motivated and inspired rather than a stick to hit myself with.
4. Journal both P/L and Execution and "Force (my)self to write what you have learnt from each trade"... Paul is sending a XL spread sheet template for me to download.
5. Paul also recommended Alexander Elders "come in to my trading room" and getting the rest of Curits Faith's books.
On Mechanical Trading "Ambiguity in a fast moving market is going to kill you"...
create a step by step plan even your mum could follow.
Trade more than one currency up to 6 pairs ideal EU,EJ,GU,AU,UJ...
Use heat maps and correlation weekly to find volatility
Trade times 0630-1030 = 4 hours. Can also trade US session but only if EU session went well
3 losing trades in a day, stop trading for day
Keep it simple
On Truths QUOTES...
"Your risk profile defines/affects your attitude to risk and entries"
"FBTs (fear based traders) need rules and precision particularly on entries"
"There will always be clusters of losses"
"RRR 1 - 1.25 is perfectly acceptable in intraday trading."
"43% hit rate and a 2:1 RRR; you've got a business"
"Ambiguity in a fast moving market is going to kill you"
"20% of your wins will run straight into your PT"
"traders get paid to manage risk, Analysts get paid to make the right call"
"your first loss is always your smallest": If you are intraday trading (whether you like it or not) you are a momentum trader. No movement after an entry = no momentum. Like a surfer if there's no wave or miss time it you're not going anywhere. Don't wait for stop to be taken out for a full 1% loss, if it doesn't go your way after 3 bars, close it. If it takes off afterwards get in on a re-attack.
Map to success: S.A.P. Survive, Aquire, Prosper.
UK and EU IR have created better moves than NFPS recently
On Testing: Forward/Back...
If you are going to (insist) on backtesting, do so to pick holes in your approach not to cherry pick all the best trades and give yourself unobtainable success to achieve.
Forward testing is Paul's preferred method he recommends a 50 trade sample size for accuracy, samples may fail to produce positive P/L "BUT something will come of it(them)"!
On Entries and Stops
I use HOLP and LOHP as entries this is fine but I may well be able to tighten my stops
Good stuff George. I must come back and study all. Thanks
ReplyDeleteThanks Pete! YVW
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