Transcription
All right. So, you're here as the strategic operator. You've made it. Now, if you made it to this level and you've come in at this level, then I applaud you because what that basically says is that pretty much everything is in line. You're able to execute effectively with discipline. You're clear on your strategy. You're doing 95% of things right.
And it's you're probably here because you're looking to to grow your trading. Maybe looking to adapt what you're doing and start using prop firms or set up a fund. Or there could be other things that you want to do. You might want to start optimizing or have already started optimizing your trades to be able to increase profitability. And we'll get to all of that in video two.
But essentially, let's look and summarize the breakdown. And this is the feedback I get from students I've worked with that have made it to this point. You can see it in the way that they operate, but you can also you can when you talk to them, you can you can hear it in the words they say. And this is the types of things that they will say once they reach this level.
They're clear on their strategy and they execute with discipline. Another word that I would put in here is they execute with discipline and confidence. I log every trade. I review everything. I don't break my rules. And I'm not chasing short-term wins anymore. And I'm focused on consistent execution.
Another word we have for this, Jerome, one of our traders, he has the word I have I focus on flawless execution. And I think that's a great word. So, not only consistent execution, but each trade I place, I I place that trade with flawless execution. As it says here, my emotions are stable and I've learned to think long term.
So you've bridged that gap where now everything has a very very high level of certainty in terms of how you're operating the gap between what the strategy delivers. So that might be 5% on one month. It might be 15% on another month. It might be minus 2% the next month. It might be break even the following month. Regardless of the distribution of the trades and what the strategy delivers on paper and what you deliver, that gap is shrinking very fast. And usually that gap starts shrinking in level four and is almost pretty much closed by the time you get to level five. And as it says here, almost non-existent.
So essentially what the difference between perfect on paper performance and your performance next to that, that gap is almost non-existent. And the phrase that we say is, you know, you're at that point because you're running what's called parallel performance. So whatever's happening, you're able to deliver on that strategy. You're not breaking your rules. You're not trying to shift everything. And as the distribution of those trades play out over the longer term, the gap between what those trades are doing and what you're doing is non-existent.
So the way to think about it like this is uh what is my actual performance versus my what what's my actual performance versus the perfect performance. So if you to go and back test an entire quarter and the result was 35R for that particular quarter and the distribution of the trades were all logged on the on the spreadsheet. Your spreadsheet in terms of what you've actually done when you compare the two is almost exactly the same.
So now you're aware of that. Let's go and see how this shows up in terms of areas. So let's start with analysis. Now if in the issue box I've put here, you're now unconsciously competent. Analysis is habitual and you've mastered the process. So you might be thinking, well, what's the issue with that, Ally? If that's what I'm actually doing here, what's the issue?
Well, the issue sometimes when you get to this point is people get to a position where they start getting bored. So I probably should have put that in the box, but I wanted to highlight that what happens here is you've moved from that conscious competency in level four to the unconscious competence. So you do it habitually. You've got your your times, you've got your process. And as I say, the first thing that happens to me in the morning when I when I get up is I find myself in front of my screens following my analysis process because I've done it so much. It's almost automatic. But the risk is potentially here a little bit of boredom kicking in or a little bit of complacency. So be careful of that.
Now where it says what you focus on next, um you don't have to focus on anything next at this level. If you just consistently keep doing what you're doing and follow everything that I talk about here and you stay and don't react and don't fall back into old habits, then there's nothing that you have to necessarily focus on next or change. You can continue doing this. You just need to pay attention to the strategies performance and make sure market conditions don't shift hugely. But you'll know this through the analysis process anyway. and make sure that you don't that that you're aware of any big shifts that go on that could affect the overall performance of the system.
But essentially, you can just keep going, keep going, keep going. Remember, the analysis process is designed to work with markets that are in a sideways moving market or moving up or moving down, which is going to happen anyway. So, it's highly unlikely that you're going to have to strip everything back and redo anything. The strategies that the guys are trading alongside me as a swing trader. They've been trading since 2013 and we've had plenty of different market conditions throughout that process.
But if you do want to change something, only make small changes and have the rule of only changing one thing at a time. So it might be that you want to increase the R value and run certain trades for longer. Well, you might want to bring a divergence filter in for that. Okay, that's fine. But don't look to bring a divergence filter in and bring in something else and bring in something else and bring in something else. Only change one thing. Make sure that thing has been tested and proven and make small changes and see how you react to trading because at this point the the key thing within analysis and strategy is that you might still not be able to run trades for longer. If you made a massive change and said look I can increase my return from 50% a year to 80% a year if I start running certain trades for longer but you've also got to experience the discipline around that so that's an important element to bear in mind as well.
As it says for strategy uh wanting more setups usually what happens here especially if you're greed orientated trader is you want to trade more you want to trade another strategy you want to bring things in you want to do other things but again only bring in only one new strategy at any time and potentially possible demo trade it first. So, think about demo trading it because you want to see that even though you've got this consistent approach, things feel easy, habitual, and unconscious. You do it, you're in the flow, adding one other thing in, especially a whole new strategy if it's in a completely different market condition. That could flip things a little bit or make it a little bit harder for you to deliver on what you're already doing really well. So, again, just be careful. Take your time. There's no rush. See how you respond and see how everything works when you add in new things and keep it simple. Only add in one new strategy, one new um analysis process. Don't add in lots of things at once. I see this happening with lots of traders when they are at this stage and I have to say just be careful here because I know you want you you've got that burning desire to move on and and make more and do more, but you need to take your time over it.
When we look at risk management here, it says only running trades for smaller um R values. That's usually the issue here. So traders will look at it and say, "Well, I've seen these trades run on. I talked about this in the last section. I'll talk about it a bit in a minute when we go into video two, but I just want to run the trades for longer. I want to make more of the money I've got or I want to add more money into my account and also run trades for longer." So ultimately, the risk here is greed. So you've worked really hard to tame that greed and keep your emotional level levels at an equilibrium. And again, I'll talk about this in video two, but actually what happens is that there's a sort of side scenario that goes on. What if I could do this? What if I could do this? What if I could do this? And that's fine, but the most important thing, testing and reviewing.
Um, keep keep testing and reviewing your trades. I always say to people at this point, keep testing even though you're building up live data as well. The more data you've got, the better. So, keep building data up. We'll talk about that in the next bit in a second. But as it says here, optimize for R values and stops. So it could be that you want to actually start moving stops or running trailing stops. Do all the testing. Review it all. Keep testing. Keep testing. You can real time test. So you can actually do this on a demo account. So you can real time test the scenarios as they happen now along with the back testing. And then start to look at the consequences. Again, I'm going to talk about this a bit more in video two before you actually implement anything. So again, it's proceed with caution here. You're doing everything right. There's a bit of value or there's quite a bit of value to that saying of if it ain't broke, don't fix it. Um, and for some of you, you might be fine saying, "No, I'm just going to carry on doing what I'm doing here." That's great. But if you want to expand on what you're doing, do it strategically.
So, where is this data here? Um, one of the things I've seen happen a few times is the trader has become consistent in their application. They're going through a lovely consistent period in terms of their results. Maybe they're six months, nine months into this phase. Everything's going great and then suddenly they hit a bigger losing run than they've had either at any time that they've traded or it happened so long ago that they almost can't remember it and suddenly they go into a bit of a psychological panic over this and they don't use the data. The issue here is they don't go back and review the data and that's why I was saying a minute ago continue to build up data whether it's your live data or back testing data. The more data you've got, the better because you'll have more examples of when uh the mark when the strategy is going through a draw down or when it's doing well or when it's quiet. And the more of those scenarios you can reference back at the it helps recall either when you went through it before. Because you can look at date and go, "Oh yeah, I remember that now. I remember going through that quiet period or that losing run." Or if you didn't go through it, you've got it there as a reference point.
So yes, you've done all this work to make things habitual. Your emotional levels are much better. But if you've been through a period where you haven't experienced any kind of tension or stress from your trading, it's just ticked along for 3 to six months. Suddenly, if something changes, what you want to make sure is you remember the habit to go back to your data and focus on that.
So, as it says here, track live trades and keep testing, build a bigger data set, which is what I've just said. Keep building more and more data. Journaling wise. But this is where traders tend not to keep it up as things are now working. So what I mean by that is, well, I've got my emotions in check. I don't need to journal. I've stopped journaling. I'm consistent. I'm not breaking my rules. There are no CRBs. There's only the very odd mistake. I'm tracking that on my spreadsheet anyway. And suddenly filling out the pre- during and post emotional analysis process that I talked about in other videos, that becomes a bit of a pain. And you don't really need to do it. And the results are showing up both in terms of profitability and how you are delivering on the strategy. So you think well I don't need to do it.
So what I said here is you can reduce it a little but only if your emotional levels are in check. The test here, and this is a big difference between a level four and a level five, is if you are sticking to your rules, but as I said in the previous level, if you're doing it through gritted teeth and your emotions are all over the place and you get to the end of the month and you're almost exhausted because you've stuck to everything, but you've emotionally you felt everything, that is not a point just because you've been consistent in your application and you can look back and say, well, I've got no CRB trades. My performance in terms of applying stuff has been good. I've been uber disciplined. You have to have enough self-reflection to go, well, I'm operating strategically, but I haven't actually got that emotional level down. It's still an up and down feeling. It's a roller coaster over a period of a week or a month or however long it is for my emotions. Then you need to keep that journaling process up.
So, a big marker of when you're at the strategic operator level, it's not just that you are doing things at a high level in terms of discipline, but you're not feeling it emotionally. And I think that is one of the critical markers and you can see it because often the trader starts to look lighter. They've got a weight off their shoulder and then when they do go through a losing run, you can see that it doesn't actually affect them at all. So it's not just about how you apply things. It's also about how you feel about things at this level. Good.
Lastly, mindset. Getting bored can be an issue. And as I've just said, reacting too much if you hit a rare losing run or draw down period. They're still going to happen, but they're likely to be a lot less, but they still could be extreme. So, that's the key thing, and that links back to the journaling and the data, as I've just said. But it's also important to make sure you're doing things with your mindset. So, a lot of people at this level will take the time to visualize. They will have bought into meditation. They will have bought into breath work, especially if they're day trading. These things can help a lot in terms of focus. There's even traders I work with where we look at we look at diet, we look at their levels of caffeine, there's all types of things like that. I've literally worked with traders where you can see that they are quite highly strung naturally as people. So if they have too much caffeine, that can be where things go wrong. So a lot of these things can be in place and it's important to have that mindset that even if from a trading point of view, you're essentially plotting along, you're doing your thing, you still to need to make sure you maintain all of the things that got you here.
All right. So, as it says there, use data as an anchor point. Maintain that habit regardless of the result. So, the key thing here is you don't want to be in a position where you only review and check your data if things aren't going the way you want. Make that a habit on a weekly, and a monthly basis, regardless of whether it's been a good month, a bad month, or a quiet month. Make sure that you keep that habit up. Stay focused on what works. And it's important to remember and re call the things that can trigger you even if they haven't happened.
One of the key things that would summarize a really really effective strategic operator is they are scenario planning ahead of time. So they're not necessarily thinking the worst, but if they're on a a uh six, seven or eight trade winning run, they look back at their data and they say, "Wow, over the last 20 trades, I've only had two losers, two break evens. I've had a lovely run of winners here. It's not that they sit there going, "Oh, it's all going to go to [ __ ] soon. I'm going to end up having a load of losers." It's not that they think that and think pessimistically. What they do is they go, "Okay, what if the scenario was to change?" And because they're in so in tune with their numbers, they'll probably look at the performance over the last couple of months and go, "Wow, this is outside of the average performance." So, as a result of this, I'm now expecting there to be a less good performing period. It might not happen straight away. That winning run might continue, but they are scenario planning ahead of time.
And the same thing works the other way. If they see themselves going into a bit of a losing period and they're on a four trade losing run, and they can look back over their data and say, well, over the last two years there's only been three four trade losing runs and only one five trade losing run. It doesn't mean on trade six they double up their risk. But they are scenario planning and they are preparing for the market or the strategy or the result to shift at some point sooner because they're able to look at the data and scenario plan which what it does is it doesn't mean they sit there and hope oh I can't wait. I hope that's trade six is a winner. They scenario plan and understand that they're moving away from the average so the result could shift. And it's the understanding and appreciation that although you've got an average win loss of say 58% or 62%. That that's going to fluctuate at different times and the data is there as a guide. It's not necessarily going to work exactly. You may have the best winning run in the last 5 years or the worst losing run in the last five years, but they're able to work with that and scenario plan about the bigger picture, not just simply going into the trade and feeling unemotional. So, they're looking at all of these things and being very strategic in their thinking, hence the name of the level.
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