Transcription
So, here you are, level four. So, you're either here because you're having a look at the level above, you're having a snoop, you're you're doing your homework and seeing what happens once you get to that point where you turn the corner, or you're already at this point based on the questionnaire that you filled in. So, either way, the key thing to understand here is the journey isn't over, but you are turning the corner. And this is where things get critical.
This is probably the most exciting area for me as a coach when I'm working with somebody because this is where things are starting to fall into place, but there's still a lot of work to be done specifically and very much in the area of data journaling and mindset. Uh, yes, there's still going to be technical skills that you're building on and you're by no means in a perfect position where it's all happening absolutely naturally, but the shift does move in that direction because more of the things that have taken a while for you to do and essentially become uh become consciously competent at that's now starting to happen. So in terms of your technical analysis and your skill that the goal there is for to make that more habitual so it becomes unconsciously competent. So all of your focus goes into how you execute and then as you move into level five and six, how you optimize and start real ownership of the strategies and processes that you trade.
So the big thing to be aware of here before I get into the breakdown is lag time. A lot of scenarios and a lot of traders in this scenario, it's easy for that frustration to come back up and they can fall back down into level three because there's often a lag time in the results. Because I want you to imagine you could have been doing everything wrong prior to coming into this level and turning that corner and as a result that was actually showing up in your trades as losing trades and it was showing a lack of profitability. But just based on the timing by which you start doing everything right doesn't automatically mean you're suddenly going to have winning trades. We're very much brought up now in a culture and society is very much on um, you know, quick fixes, immediate results and that can be compounded especially when you're starting to do everything right. You could want to be rewarded immediately. But you could be following a system and a strategy that just happens to be going through a draw down period. And I mentioned that in a in on the previous level when I was showing you some of the data that you can simply come in and start doing everything right from a timing point of view and all that's happening is the timing is meaning you're having a draw down period. Now if you think about it, let's say you come in and you have three or four losing trades on the drop and that is as a result of doing everything right. But the challenge is you were having a draw down period before you started doing everything right because of all the losses you were having because you were making mistakes and doing things wrong. So it can feel as though you're like, when am I ever going to see the results come through? So the key thing here, this level is all about sticking to what you're doing even if it is boring. It's the discipline to continue doing that that is key.
So let's start looking at the breakdown here. What is happening? So essentially, if we were to summarize it, you're starting to settle into a trading process that is data proven and feels solid. So you have that feeling of certainty. It doesn't mean you still don't have emotional ups and downs on your trades, but you definitely feel a lot more certain in what you're doing and you feel a little bit more peace and and and focus because where you are now is in a situation where I know I don't have to worry about the strategy that I'm trading not having a proven track record over a decent sample size. I can now focus in on refining certain elements of what I do. But the problem here is traders will often at this stage because they're used to changing things and fixing things. Now they've got the strategy that works, they still are in that changing and fixing mode. And as I've said in the previous level, you've got to turn that learning and that focus. That focused refiner is on refining how you operate initially and refining that process so you're more and more consistent. It doesn't mean at this point that what you are doing is changing every little last thing. There will be refinements and changes to the analysis and that element as well. Um, but a lot of the optimization will come further down the line. And I'm going to show you a very specific way that if you want to optimize what you're doing as you move out of this level, you do it in a very specific way because the risk here is you refine too much. And actually what happens is you've actually gone back into that mode of changing things under the guise of doing it more logically. But actually what you want to do is refine very minimally as it says there in a focused way. But make sure that you're doing that without changing too much. And that's what I can see here is people start to think short term. They haven't expanded their space and time horizon out enough. And even though they're more competent in the delivery of the strategy and the strategy works, they start looking at a result for a week or a month and start to change it.
Now, before I get into that in more detail, let's look at what what people say or a summary of what people say and how they feel at this level. It says there, I found a strategy that I'm sticking to. And that's the key thing here. You know that you're in this level, but even though you may want to make changes, you still want to test things. You see things and you think, oh, maybe I could add this or do that. You have a strategy and a system and you are sticking to it. And the second key thing, I'm tracking my trades, reviewing my data, getting feedback, and then as it says there, and learning from any mistakes that are being made. And month in month out, those mistakes are getting less and less and less, and you've pretty much eliminated what we call contrast rule breaks, where you're actually going in and breaking the rules. It's usually only through subtle mistakes or uh unknown issues where you've missed something on a particular setup. The are the issues with your trades in terms of execution, you've really eliminated what we call conscious rule breaks where you're just trading whatever you want. You know, you shouldn't be, but you're jumping in on a move or you've missed the trade and you're jumping in late. That's going to happen very minimally at this level. It's not at the perfect stage. That comes as you go into level five and six, but that's going to be much more minimal. As it says there, I still mess up, but now I can see where and why. So that's where what happens is you are able to see the triggers more clearly. Not completely. There's still some issues around seeing emotional triggers, which we're going to talk about in video two. But what's happening much more consistently is if you do make a mistake, you can see why.
Because the strategy that you're trading, you're moving from conscious competency. As you come into this level, the start of level four is conscious competency, which basically means I'm competent at delivering that strategy, but I'm still doing it very consciously. As you move out of this level, you're moving into what's called unconscious competence. And this is why I have a lot of fun working with people at this level because I see that literally happen over weeks and months as they get more experienced and start delivering.
So, this is the key element. What happens is all of that and following that specific process and doing everything that you should be doing as a focus refiner means you will just become more process-orientated. So it says here focusing more on the process than the outcome. And by the end of this level as you move out of it then you are hugely process-orientated and what you do is you end up making the process the outcome. So I was literally working with a trader, a guy called Farib only about a month ago. And one of the things that happened to him, he was in that position where he was doing everything wrong, having a whole host of losing trades, doing all sorts of things wrong, trying to trade off his iPad, trying to trade off his phone, no real system or strategy. And when he first started working with me, even the strategies that he was trading that were proven, he was still struggling to get those exactly right. And then he started getting to that point where he was moving into that conscious competence phase and he was doing everything right. And then what was interesting was the strategy went through a draw down period. So he had to deal with that same thing I was saying earlier which is that the multiple hit of doing lots of things wrong and losing money for 6 months, 9 months, a year, however long you might be, then doing everything right and still going through a draw down period. And that was the key bit where he had to remain focused and as it says there stick to the strategy. And to do that, one of the things I did with him was to make sure that we made the process of delivering on the setups every single time a trade came along. We made that the result because for a lot of you that are moving into this level, you're going to be very results-orientated. You're going to be very focused, very driven, and you want to get to this point where this is working for you. But one of the challenges is that results driven focus can lead to you still looking at what happened this week, this month, and thinking, heck, I'm doing everything right. I haven't made any money yet this month. Well, the key is to stick with the strategy, obviously. But how do you do that? You make the process of sticking to the strategy that becomes your measurable. So, one of the things I do with with traders I work with is I make that the measurable. That's what I want to know. I want to know how many conscious rule break trades have they had, how many mistakes have they made? And we make the result that they focus on the fact that they are following that process. So, the process becomes the result. And that's what we measure. And then the actual result of the trade becomes secondary. And what happened with Farib and all the other traders I've worked with is as the strategy starts to come good, he's now in a position where he's back in profitability because he had to sit through that lag time, focus on the process, and then let the strategy criteria take care of themselves. And obviously that's only going to work if you've got a proven strategy that you've tested and you've done that work ahead of this point. But if you've done that, you have to have faith in the strategy and stick to it. And part of this level is just being disciplined and going through that boring phase of sticking to what you're doing.
So what are you going to be focused on here now? Working on mindset as there is a proper as there's proper benchmarks in place. You're using some of the performance markers I'm going to talk about in video two. And it's not perfect as I've already said, but it's in the right direction. And this is the phase that you move through where everything is on the up rather than it feel like such a battle. So you've still got to remain disciplined and focus. But this is where things start to shift.
So let's have a little look at key areas here. So I want to have a little look at analysis. So what can happen here? What can be the issue? You've got this strategy now. You've tested that strategy. You've worked through it. You're happy to trade it. You feel good about it. Well, you can still be tempted to use too many tools because you might think, well, if maybe if I added this, maybe I added that. The here the thing here is old habits can die hard or change what you're doing because you see some other trader that's trading another strategy or doing something different and they happen to be doing well at the point that you're just still stagnating. The result hasn't caught up with your consistent effort. So the issue here is still that temptation to do things that you used to do and move back into that phase where you're you you start doing things and changing too many things and listening to many different information sources. What do you want to focus on next? Master the process you've built as it says there and avoid over complicating it. How do you do that? Well then you make the results-orientated element as I've said the process and you just make your goal to master that process and that's what you measure.
Same with strategy. you're worried uh, I'm missing out by only trading one or two setups. So, I've had this with traders I've worked with where they've got the capacity in terms of their time and analysis to trade more than one setup. They they're trading one, they could trade two. They're trading two, they could trade three or four. The problem is is they could bring those new strategies in and because they're only at a conscious competency phase of delivering on those strategies, the additional strategies, the additional analysis, looking for different trades in different market conditions can actually mean that they start to make more mistakes in the original two setups. So essentially what's happened is the system and setups they've been trading for one or two strategies, they haven't got to the point where they are skilled enough at it. It's not automatic enough. They haven't been doing it long enough. and as a result of that they bring in something else and it it impinges what they're doing over there. So the key thing here is keep testing and reinforcing the strategy that you've committed to. So keep building up data with the strategy or the system you're trading. If you have other stuff that you want to bring in, then the the the easiest thing to do is make sure you've tested that first and then get some feedback to know that you you can bring that in and test it. Don't jump automatically with real money onto something new. If you're trading real money on one or two strategies that you are doing well on, start with a demo. See how it how it is to actually bring in something new and whether or not you can cope with it? Because the problem is most traders sit there and they go, if I can make more money and I want to make more money, why don't I? But actually, it's not necessarily whether the system on paper or having three strategies means you'll make money. You'd only bring in a third strategy if you knew it was going to make you more money, but you might not be able to deliver on it. So, the the thing here is to just keep it simple and don't rush into bringing other things in until you are more unconsciously competent with the system and strategy that you've tested.
When it comes to risk management, uh, your short-term outcomes can still shake confidence. So, you could get that situation where you are seeing trades coming down and losing and you think, well, if I'd move my stop to break even and that old habit creeps in and and you haven't tested that and you think to yourself, right, I'm going to start doing that. So, essentially what's happening, you're changing the risk management process. You could be tempted to risk more because you think, well, now I know the strategy and I've seen that I've had two, three losing trades. Statistically, I'm only likely to have that x number of times. So now you actually use your data against you and you think right on this next trade I'm going to double up because the stats are in my favor. But with the random distribution that will be the one time that the trade ends up losing again. So the key here is not to use your data against you and start playing around with your risk. And I come back to sometimes old habits can die hard. So you got to be careful of that. The other thing that you might have is you might have a strategy that does have a stop management system in it and you're moving your stop to break even because the data and the strategies suggest the data and the numbers sorry suggest that that is the right thing to do for that strategy. Well, the problem there is you will have some trades that will go up, come back, clip your stop, let's break even, and then go on to hit your target. And in that short-term moment, the risk is you think, well, I don't want to use my I don't want to use my uh stop anymore. I don't want to move my stop because I've had two losing trades. And had I not used the stop on the third trade, that trade would have hadn't moved my stop to break even uh on that third trade, then in that scenario right there, I would have had a 3 to1 winner and I would have got back my losses on the two trade and I would have been up by 1%. Again, that's what we call hindsight bias. So, a lot of what goes on here is you can start bringing in what we call hindsight bias, confirmation bias, and recency bias. I'm going to talk about these more in the second video because these biases mean that you go back to a short-term focus. Those three biases are critical because that not to let them slip in because even though you've got a system, you can think, "Oh, now I've got a system. Everything's going to be okay." But there will be habits and behaviors that can can can slip in because you are still short-term focused and you start fiddling with your risk whether it's increasing your stake, increasing the percent risk per trade or as I said there moving stops or choosing not to do that. So stick to as it says there still stick to a fixed risk and don't over complicate your exits. And if there's anything new you see on a couple of trades and think, "Wow, that looks interesting if I did this and did this." Test that separately because what you might find is you're only seeing that because the contrast of seeing that relative to what happened on your actual trade is what's making you think, "Oh, that could be a good thing to do." Combined with the short-term mindset that you're still working to get over at this point, that could create you falsely, again, form a confirmation bias, falsely biasing what you're seeing. But if you think, "Ah, that looks interesting. I'm going to test that outside of my trading time." That could be something that you then bring in and start to optimize as you move through this level.
Then data and journaling. It says there, "Not fully into the habit of tracking and analyzing data." Now, a lot of traders will be consistent at logging the data, but maybe not so good at analyzing it. So, you're still unsure necessarily what to do with it. So first thing is make tracking your data non-negotiable at this level. If you can obviously get regular feedback on that data because that will help. But don't fall into the trap of getting behind on your data. So what I say if you're a day if you're a day trader never get more than a week behind. So if at the end of the week you've missed you haven't tracked say Wednesday, Thursday and Friday's trades, ideally in that weekend get them plugged in. At a push, you could probably leave it to two weeks, but after two weeks, you're fighting a losing battle to catch up on your data. And then you don't want it to become a chore, so you get like a month behind. Then you've got to spend three days trying to get all your data together. So don't let it go absolute maximum any more than two weeks. Ideally, no more than one week. As a swing trader, never let it get more than a month behind because the same thing applies. So stay on top of tracking your data. Make it a non-negotiable. plan it into your diary. Make sure you're doing it and don't get too far behind on that because ultimately if you haven't got the data there, you can't create the feedback loop for yourself or somebody else can't access that data to help you with it. So that's key.
And then lastly on journaling, there's still going to be probably an element of uncertainty around what to do with your journaling. You might not be reflecting what's going on deeply. You might get caught up in the result of the trade and not think about how you were feeling at that time or you might forget to journal and then it's hard to track back. So, if you can at this point, this this is really useful because as you're learning more and more about mindset at this level and you're learning about the different biases, your personality styles, it will make it much easier to join the dots. So, you don't only just see a pattern to, well, I have three losers and I break my rules. You'll start to understand what goes on in your head. So, if we go back to what I was saying about my situation, if you watch the videos in the the level below, I talk about the fact that when I had two losing trades in the morning, statistically, I was much likely to have a higher trade frequency that day on average, 4.8 trades. So, for sake of argument, if I had two losses on on a day, I was highly likely to have nearly five trades on that day. Sometimes that was legitimate, but a lot of time it wasn't. So we were able to see that and we could I could note that and then I had the awareness then of well hang on a minute if I place two trades and they lose in the morning I'm much more susceptible to subtle rule breaks in the afternoon but what else was going on mentally. So one of the things I do with traders is I get them to think about what was the voice in their head what was the picture in their mind what were they thinking and what I used to imagine was getting to the end of the day and getting back to break even and I would imagine a sense of relief. So what I was doing is I was future pacing an outcome that I didn't have control over and moving that forward to the end of the day and visualizing sitting back in my chair, chilling out going, well, you know, I didn't do anything wrong. At least I'm back at break even. Tomorrow's another day. So I could clearly see the picture that was coming into my head and the words that I was using and I can still recall them now. So I was thinking, yeah, back to break even. Tomorrow's another day. That feeling of relief. So what's the feeling you're getting? What's the picture in the mind? What's the words that you're saying in your head? And I was able to see those and feel those thing, feel the emotion, hear the words. So as they came up, I knew they were my triggers to potentially mean unknowingly, almost unconsciously, I was being loose with the setups and missing levels and just not being as strict as I needed to be with setups. So the key thing there is, yes, you can see the numbers through the data, but if you're journaling and you understand mindset, and I'll move down to mindset here. If you start understanding mindset, you'll be able to understand the triggers more. Because if you can stop the trigger before it happens, there's a greater chance, much higher chance of you then becoming more consistent and not actually allowing that trigger to do things that you shouldn't do in my case or for some people that trigger stopping you from doing something you should do. Because remember, not all traders are greed-based traders like I was. Some traders are more fear-based. So actually the the voice in their head, the picture in their mind, the emotion that they're feeling is stopping them placing the trade. So understanding personality styles, fear and greed, all of these things is really where that refinement is going on through your data and your journaling. Yes, there can be some refinement of your strategy as well and testing things outside of what you do, but really this level is all about refining what goes on there with the assumption that you're able to stick to the strategy and execute it. And only when the data shows you to do something different, add something in, take something out, optimize the risk management, do you actually do it because then you'll have a smooth transition into level five.
So, as it says here, you still will be occasionally reactive. You're not fully understanding the patterns and triggers, but you're starting to be aware of them. You can see them through the data. And as it says there, create feedback loops and use them. So, create your own feedback loop. Ideally, you create a feedback loop with somebody external. Use them regularly. And as it says there, I've already touched on this, start to understand your biases and personality styles, which we're going to talk about in the next video.
So, you might be thinking, what's next? Well, feel free to follow me here for more trading insights. But if you're looking for an even more clear, specific, and proven route to your own trading success, then check out the links in the description, and they'll show you exactly how we can.