I have been trading for six plus years now, and the learning process for me has seen its fair share of detours and dead ends. I have wondered recently, what advice on resources; I would give myself if I started again.
The following has probably had the biggest effect on my trading over the years, but there has been many smaller influences that have all contributed to my current style of trading.
Finding a potential edge in the market
Whilst this is an area of great importance, I found that it is not the key to success by itself, rather a foundation. Without an edge we cannot make money, but even with an edge there is no guarantee of making money.
I have no affiliation to the following so I am not going to put links up for these resources but I think that these are all good places to start looking for an edge.
You can just google them and each of these have excellent free resources as well as paid stuff.
Supply and Demand by Sam Seiden from Online Trading Academy
Supply and Demand in a Nutshell thread on Forex Factory
Tom Dante – Support and Resistance.
Lance Beggs – yourtradingcoach – Price Action Trading
Futures Trader 71 (FT71) – Volume profiling, context and much more
Adam Grimes – The Art and Science of Technical Analysis – Excellent blog and course
Peter Davis – Jigsaw Trading, excellent videos on reading order flow and volume
Investor RT – Homework – Plenty of ideas here to find a statistical edge in your market.
Back testing the potential edge
It is important to have a good understanding from your own back testing that there is a potential edge. Do not take any other traders word for it including mine.
We must learn how to do this properly. Many of my first back tests where flawed, and this means that we are starting from a dodgy foundation.
Resources I found invaluable in improving my back testing
Adam Grimes – The Art and Science of Technical Analysis – his free course and blog cover this topic in depth.
FT71 – His videos on standard deviation curves in excel are invalable tool to every starting trader.
Evidence Based Technical Analysis Book by Aronson . Whilst the actual testing of the systems was not particular of use to me, what was very helpful was how to test systems and how to make forecasts, all of which helped me in my back testing and in making better plans for the day and intraday.
Forward testing the potential edge
Test the edge on a demo account, personally I would not spend a lot of time in this area it has limited uses in the long run.
The primary use is to compare that over a minimum of 50 trades, it produces similar results to back testing.
A Realistic Expectancy
And I am not talking about our edge, I am talking about our expectancy of what is going to happen when we start trading live. There is a lot of crap out there but I would recommend the following 2 people
Tom Dante for the no bullshit truth about trading, and
FT71 from Stage 5 Trading. And his you’re not special approach.
Both have invaluable information to share about life as a trader.
Rules and Plans
You need rules on how you going to enter and exit the market, even if you are a discretionary trader.
I suggest that you look at Tom Dante flow chart for his setups and start from there.
You need a plan for the day, again I would suggest a good starting point would be Tom Dantes’ Futex trading plan and then FT71 videos on trader bites and hypos.
The important thing to remember that the key is simplicity, the more complex it is the harder it is to follow. We must work constantly to improve the processes we use.
For example I am on version 24 of my setup rules and version 17 of my trading plan.
I would suggest reading Daniel Kahneman and Thinking, Fast and Slow. I personally think that this contains essential knowledge about how a trader should be approaching the whole trading process.
This is the one of keys in my opinion for turning the corner. This is key to constituency, finding weak areas and finding stats to improve our trading.
Excellent resources on journaling are
I think that one of the most important but missed aspects of journaling are mistakes and error trades.
I have written about that before
My first attempt at reducing errors, which was successful from taking me from an error rate of around 40-48% to around 10%
And my second attempt to get it from 20% to under 10%.
In between these 2 attempts of reducing my error rate, I had tweaked my style of trading to be more aggressive, which resulted in more trades but an increase in errors especially in the “not in the plan” and revenge trading.
Are you mental enough
The psychological side is another key to turning the corner. There are a lot of excellent resources out there that focus on the trading side so I will not cover these again but would suggest that these books are essential reading for every starting trader
Chimp Paradox – Steve Peters
The Power of Habit – Charles Duhigg
Thinking Fast and Slow – Daniel Kahneman
The biggest thing that helped on me, was learning and accepting these 2 things
If I want a different outcome then I must change my approach / behaviour to achieve this.
I cannot control what has happen in the past but I can control how I react to it.
I am not sure who it was that explained these two ideas to me in such a way that I truly understand and implemented them to a degree that changed by mental state. I think it was FT71 but I am not 100% sure.
I would suggest that you take a leaf from Bruce Lee
Adapt what is useful, reject what is useless, and add what is specifically your own.
Good luck on your journey.