Lessons from the Pros

Specialty Skills

Practice, Practice, Practice – Part II

In last week’s article, we looked at the importance of incorporating a TOTE in advancing towards your goals. That is, using a Test, Operate, Test, Exit approach to train yourself in strategies that are designed to get the results that you want. Using the TOTE process is akin to practicing, but it is more involved and specific in details than just practicing, because you might practice a procedure many times and get good at it, however if the procedure is not sufficiently matched to the exact outcome that you want, no matter how long and hard you practiced, there would still be a certain disconnect between what you had been doing and getting the exact result that you were focused upon.  Let’s go further in the concept.

John is a trader.  He wants to play the Friday morning, 8:30 AM EDT Non-Farm Payroll Economic Report.  He lives on the west coast, so it comes at 5:30 AM his time.  He stays up with his buddies the night before, drinking, and gets home a little late—something that he does often.  When the alarm rings, he snoozes just a little more, but awakens with enough time to dash to his computer and pull up his platform.  He has tried to get up early enough in the past to practice yoga and stretch, and then have a little breakfast before taking a look at the world markets, but it has been difficult to maintain, especially when he has a slight hangover.  He’s already a little anxious because his portfolio has taken several drawdowns lately, and he is thinking that he “needs” to get back some of those losses.  He decides to increase his contract size on the Futures Index he’s playing so that he can “get his money back.”  At the appointed time he looks over at the report, but the numbers are not in yet.  He decides that the numbers are going to be positive and places an order to buy 5 contracts where he normally plays 2 due to his portfolio size.  He doesn’t place a stop, thinking that he will keep one in his head.  Suddenly the tick shoots way up and he is elated.  It goes up and up and his P/L is correspondingly high, John starts to do the money dance. Then, without warning about 2 minutes into the 5-minute chart that he is playing off, the tick begins to retrace and falls precipitously down, and down more and down more into negative territory.  It then picks up steam and drops like a red brick.  He panics, and when it has fallen over 3 points against him he doubles down hoping that it will come back.  It falls another 5 points before the next 2 candles close.  Now he is 8 points and several thousand dollars down as the tick then stalls and moves sideways.

John would help himself tremendously if he:

a)      Formulated a vision for the state or desired outcome

b)      Determined what details were necessary to achieve that state by modeling someone who is successful

c)       Determined or decoded his strategy to short circuit or interrupt ineffective patterns so that they do not compromise any new strategies

d)      Developed and began to run TOTEs in order to get closer to a desired state of outcomes that match with current state of outcomes

Professional traders have TOTEs; they are called successful trades.  When you follow your rules, you are initiating a TOTE to take you to a successful exit, part of which looks like pulling the trigger at just the right time with successful entries and exits.  But often, without rigorous examination of your patterns, it is difficult to determine why your current outcome states do not match your desired outcome states.  Only through critical thinking, examination and questioning can you find out which operations in the TOTE are missing.  When that happens, these should prompt an immediate modification of the pattern; either through testing operations or through modeling someone who does it better.

The TOTE process is part of a more involved protocol of modeling.  If you are modeling an individual, the key is not just to ask the person that you are modeling to tell you what they do, because what they think they know and what they really know about what they do are two very different things.  It is key to either watch them trade intently, or, if that is not possible, to have the subject imagine that they are trading in order for them to identify their nuance operations.  By modeling, you discover the structure by which you, and others, are getting results.  By choosing the important qualities that lead to desired state outcomes, you get the results you value.  You are then, in turn, able to model this behavior as you have incorporated the successful strategy and can form the pattern or habit of repeating the successful strategy while remaining flexible enough to continually look for feedback in your environment, so that, when necessary, your strategy or protocol can be modified again for improvement.

So, even though you are essentially practicing in the TOTE process, you have in actuality taken it to a higher and more detailed level where you are aiming to get a specific match between your desired state or outcome and the actual state or outcome.  When you have a set of protocols (a sequential order of steps designed to achieve an aim or goal), which could also be referred to as “strategies” you can then develop a set of effective routines where you practice or incorporate a TOTE and keep training in the strategies while making adjustments based on feedback; and this training will habituate over time creating a honed skill in that specific protocol.  Trading is a journey in self discovery toward the aim of skill-building, and the more self-aware you are in the process, the more aligned you will be in body, mind and emotions to advance toward your goals.  When this happens you have identified your “A” Game, your highest and best inner trader; and then you can focus on keeping that “A” Game honed, out, available and engaged on getting the results that you want.  In Mastering the Mental Game we show you how to attain, maintain and sustain your “A” Game through tools, techniques and concepts that are highly effective, easy to use and fast acting.  Ask your Online Trading Academy Educational Counselor for more information.  Also, get my book “From Pain to Profit: Secrets of the Peak Performance Trader” it’s 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.

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