Lessons from the Pros

Specialty Skills

Practice, Practice, Practice – Part I

Think back to when you were a child. Did you have a game that you especially liked playing? It doesn’t matter really what game you enjoyed, but one thing is certain: if you became very good at it you enjoyed it more. The better you were at it, the more fun you had when playing it. But, how did you become good at it? You practiced, that’s how you became a consistent winner.  Now, fast forward to today, it’s no different with your trading.  It you want to get consistently good at trading, you’ve got to practice.  Mastering anything involves learning, incessant practice, and being willing to fail…a lot.  Failure is the secret key to success.  That may sound contradictory on the surface; however, true achievers and champions will tell you that before they enjoyed the sweet smell of consistent victory, they tasted the brew of failure.  Actually, failure is where the most important lessons are learned, and that is where strength, endurance, perseverance and persistence are built.  In other words, you must create consistency in your diligent pursuit of protocols (trading strategies & set-ups) that are supported by effective routines, tracking what works and what doesn’t, and doing that all the time…that is skill building.  Another component is the importance of using mental and emotional tools.  By employing mental and emotional tools you remained focused on what you needed to do to win; and you did it.  In other words you followed-through and kept your commitments.   This is otherwise known as self-discipline and it is one of the most difficult things to do.

Self-discipline means that you are consistently doing what you say you are going to do.  To create consistency involves ensuring first that your head is in the game. Creating consistency in doing the right things habitually will get you the right results habitually…and that means you’ll develop capacity and enlarge your comfort zone in order to tolerate the negative emotions like anxiety, fear and greed associated with bad trading behavior.  So, you’ve got to practice, practice and practice some more.  But, it’s not just any practice.  In this article, I’m going to share with you a specific kind of practice; a practice that’s not really practice in the normal sense but a step above.  If you do it, it will ramp up your learning and your results.

As children, you learned to model by observing your environment and using all of your senses to gather information.  From this observation, you began to develop strategies to get the results you wanted and, in many cases, these strategies were developed intuitively.  But the higher and more complex your objectives, the more important it is that your strategies be conscious in order to optimize the structure.  To do this, you must steadily look for and be receptive to feedback from your environment to: a) Determine what strategies you are using to get a result; and b) Modify or change that strategy if you’re not getting the results you aimed for.

One of the ways to increase your chances of modeling or tracking successful behavior is to use a template to lay your modeling structure on.  A way to do that is the Test Operate Test Exit method or TOTE. The principal underlying TOTE is that your behavior is driven or motivated by an outcome.  You recognize when you have achieved the outcome by a unique set of evidence criteria (i.e., what you will see, hear, and feel when you have achieved the outcome, the vision of success).  You constantly compare your present state or reality to your desired state or future reality to find out if they match.  When they do match, you know you have reached the exit and have achieved your outcome.  If the present state does not match the desired state, you must complete another operation to discover if that makes a difference.

You run TOTEs throughout your life, even though you may not be aware of it.  You compare where you are with where you want to be, taking actions to bring you closer, and eventually to, the exit itself.  Examples of this in everyday life include:

  • Learning to walk – you try and fail, changing this and that until you are successful
  • Riding a bike
  • Learning to play a game
  • Learning a subject in school
  • Trading

Another example from modeling successful traders is that successful traders keep going until they have reached a successful TOTE match (their desired state of both the trade and their thoughts and feelings match, in other words, they are focused on doing only that which will create consistency in keeping commitments and following rules).  Conversely, others—those who do not naturally excel at trading, abandon the TOTE before they get the match and experience a distinct disconnect between their desired state or trade result as in trading their plan and following rules.  Then they experience the frustration associated with commitment breakdowns.  This may be due to fatigue, anxiety, distraction, distortion, fear, greed or loss of confidence in their ability to follow-through and achieve the outcome.

When I was in college, I knew a guy, Kyle, who was a great basketball player.  He didn’t begin as a great b-baller.  In fact he didn’t play much his freshman year.  Every day he would watch the older, more accomplished players.  He studied the way they moved, the way they held the ball, the way they dribbled and played defense, the way they hustled, and the way they talked with passion.  He studied how they stretched and how hard they trained.  He saw himself going through practice as if it were a game; moving as they moved.  With every play that he learned, he imagined himself going through all of the steps.  In his mind, he felt the leather of the ball, heard the swish of the nets, felt his body when he dribbled through the defense for a lay-up or charged the basket for a rebound.  He saw the wholeness of the court and sensed a balance of where the other players were.  He felt the passion for playing and the excitement of each step.  By breaking down and “practicing” this strategy, he became a great player.  He used TOTE to become a great player.

Kyle modeled his winning team members’ strategies by running a TOTE.  He tried, failed, modified, tried, failed, modified, tried, and so forth.  You get the picture.  He tested, operated and checked for a match in desired outcome (state) vs. outcome (state) attained.  In the TOTE, if the outcomes or states are not equal and do not match, then go back to operation #2, test again. If no match, then operation #3, then test and so on until they MATCH, then exit.

When Kyle’s basketball outcomes, i.e., dribbling, passing, defense, and shooting, all matched the desired outcome, he exited the TOTE for that time, only to be repeated when he identified another level of outcome of state to achieve.  At that point, he would again run the TOTE until he achieved the match.  Furthermore, TOTEs can exist within TOTEs.  For example, dribbling can be a TOTE, passing can be a TOTE, and so forth.  Some TOTEs run every few minutes, some every few hours, days, weeks or years.  Another word for TOTE is practice; however, it is important to understand the concept of TOTE because the level of specificity greatly supports the system’s alignment and effective coding (categorizing) of the successful strategy.  To just “practice” is to leave much of the process incomplete.  Essentially, the TOTE is a feedback loop designed to prompt you to find specifically what you need to achieve your desired state.  Key skills for successfully navigating the TOTE in order to be able to model are: sensitivity to what is happening, a willingness to track and learn from feedback, and the flexibility to do or learn something different when what you are doing is not working. In next week’s article I will share more about the importance and power of practice.  This is a way to support and build your “A” Game high-rise to create the consistent results that you want in your trading.  Additionally, get my book, “From Pain to Profit: Secrets of the Peak Performance Trader,” which is available on Amazon.com.

Happy Trading.


DISCLAIMER This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author expresses personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. Reprints allowed for private reading only, for all else, please obtain permission.