Progress – Black and White

Last week, in my weekly trade review – Plans and focus for 2017,  I laid out my overall goals for the year. Primary this is to become more systematic in my trading.

I traded Monday, and I quickly realised I cannot have both systems in my head. The ongoing rebuild of my system into a systematic progress and my current one which is primary discretionary.

I have made a decision to stop trading until I have finished my rebuild.

Let me be clear, this rebuild is not about throwing out my current edge. It is about 2 things

1) Understanding my context read better, and how I can systematic use this to improve my targets.

2) Turning my triggers into a more black and white means of entering. This is to reduce the amount of decisions needed to be made per trade.

How am I approaching this?

Context

I have split my context reads into areas. For example, Trending and Balance, these are then split into sub sections.

For example, Trending with expectancy to go into balance / pullback.

For a while now, I have been using the OODA decision loop to help me make decisions. Which I simplified to DADA

Hypothesis – Collect Data on the Hypo, Analysis, Decision and Act and repeat.

Which is good model for analysing stats and trade reviews.

But over Christmas, I read Streetlights and Shadows: Searching for the Keys to Adaptive Decision Making by Gary A. Klein.

Which is a good book, but it did not tell me anything new. But if you are into improving your decision making then it is interesting book.

But one section discussing the decision-making loop, and that the studies found that experienced people tend to use a different model called Recognition Primed Decision Model.

weekly trade review

I think this model fits in well with trying to incorporate my context read into a more usual model for targets and areas to fade. So, I have altered this to fit my needs with regard to reading context whilst remaining flexible.

Example

Situation Trending Market
Clues Trend Rots are >= STD DEV
Counter Trend Rots are <= STD DEV
Increasing or equal Vol/Delta on Trend Rots
Not at HTF Area of Interest
No Change in character in last rot in either Vol/Delta/PA
HTF ROT < STD DEV
Exp To make new extreme
Goal Buy Pullback to AOI with Target HTF AOI
Actions How I enter the market.
Where my stop is.
What is my TM.

Obviously, the actions change for each play. But I stick to this model until the clues or expectancies start to be violated which then gives me more clues to my other context models. Which I then switch to.

The primary use is to give me better targets, for my entries, and whilst seeming more rigid, gives me more flexibility and takes the focus off the individual levels.

I am also working on my stats, to make them into more useable pieces of information. Whether they are for scalps for gap closes and open drive, or whether they indicate where a likely target / bottom / top should be for the session.

What has helped with the Stats on the Bund at least, has been splitting the sessions into European and US. As the nature of these individual sub sessions can be very different.

Triggers

I have been working on how to express my discretionary triggers into a more black and white format. This is, not surprising, hard and slow going. But I am making progress. Does not help that I am new to coding in RTL in RT Investor. So, I make a lot of mistakes and it will take me at least another week to get on top of this.

It is not that my triggers are that complicated. Just how do I express something that was very much discretionary into something that is black and white but adaptive enough to be a realistic trigger. But I am making progress and in turn this is teaching more about my triggers than I knew previously.

For example, One of the order flow triggers I have been using which indicates a possible fade entry. Once coded and tested also shows that it certainly is not a fade entry when price breaks out of a range. Instead of a sign of weakness it becomes a sign of strength.

But all in all, very interesting time.

Looking forward to putting it all together and getting back to trading.

6 thoughts on “Progress – Black and White

  • 14/01/2017 at 21:48
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    Hey Adey,

    Great analysis, and thank you for sharing the book information on decision making models; thats given me some food for thought for sure. I like your approach to taking what is discretionary and making it more systematic; good luck with that. I am in some ways attempting the same. I have developed elaborate ideas about the motion of price which work, but result in the ability to make them systematic near to impossible. Extrapolation and simplification are key for me. From what you say I am left wondering if you are codifying the rotation as it unfolds to discern if this is a fade or not? I thought about that myself, certainly by parsing the flow and mapping them to my levels programmatically. But in the end I decided to optimize for discretionary trading since I dont have time to code my ideas yet. The beauty is that for me, I am slowly simplifying because in the end I believe structure is more important than levels, and this helps me develop conviction in a level. If structure below for example, is a strong rotation/balance area, pushing higher may (depending on other context ofcourse) mean that levels higher up would get blown out and then its not about fading the move but fading the pullbacks. ..

    Anyway, thanks for sharing your process Adey.

    Reply
    • 15/01/2017 at 14:12
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      Hi,

      Thanks for commenting. You make some interesting points. And I have codify to a certain extent what happens during a rotation. Mainly looking at volume analysis, delta, and length of rot, at various points this could mean a fade or wait for a pullback. I.e a lot of committed buyers on a break out or as a change in character to previous rotations will get me looking for pullbacks. But if the same rot appears after a extended trend, measured using HTF rotational analysis along with context, will get me looking at fades.

      To summarise, I might have a level that I want to fade, but if certain criteria are met then the order is pulled. It also depends on the level.

      Thanks for sharing.

      Have a good weekend.

      Adey

      Reply
  • 16/01/2017 at 16:27
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    Hi Adrian
    Nice read and love the Recognition-Primed Decision Making graphic. Makes things so much easier to know how and when to adjust thinking when you can understand your own decision making flow.
    I also think this ios a timely reminder to all traders that stepping back to review and reflect on even a winning edge system makes sense so you can make sure it is still relevant – both to the markets and to you as a trader as you grow.
    Many thanks…
    Les Meehan
    Right Mind Trader Academy

    Reply
    • 16/01/2017 at 22:38
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      Hi Les,

      Many thanks for commenting.

      Every time I reflect and review my edge and the associated trades, i come away with a deeper understanding of it.

      Have a good week.

      Adey

      Reply
      • 18/01/2017 at 16:05
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        Hi Adey,
        That is such a great message! I guess that deeper understanding is the reward for the time and attention applied to review and reflection.
        I wish more traders adopted this practice as a regular habit.
        Keep up the good work, it really helps!
        Regards
        Les

        Reply
  • 18/01/2017 at 21:39
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    Hi Les,

    It is a constant process of improving every part of my trading. It is difficult sometimes to really honest and admit what the problems are. But IMO this is where the real progress is made.

    Have a good week

    Adey

    Reply

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