I recently received an email from a YTC reader with an incredibly important insight into trading success.
Here’s an extract from the email:
Hi Lance,
I heard this recently while watching football.
It’s not how many great plays you make, it’s how few bad plays you make.
I immediately emailed this to myself because it is so applicable to trading. I know where the good places are to trade, but the key is waiting for price to get there and not “forcing” a trade.
It also ties in well to your Facebook posts last week and the latest blog article.
Here is the full quote I found online:
“Like I always say, it’s not how many great plays you make; it’s how few bad ones you make. I know fans, and even some losing coaches, are enamored with long pass completions or the great run plays, but that doesn’t offset the interception or the fumble.”… Jimmy Johnson
Excellent!
I love it!
This is absolutely 100% applicable to trading.
It’s the counter-intuitive path to trading success.
Reduce the number of bad trades.
How do we do that?
1. We limit our trading to our best setups only.
Get absolutely clear on what an A+ trading opportunity should look like. And then cut out anything that doesn’t meet these strict requirements.
Define the context. Where will these trades be found within the wider market structure? Now limit trading ONLY to those places on the chart.
How should price be moving (speed, volatility, smoothness)? Define your ideal conditions and put in place controls to ensure you trade ONLY when those conditions are in play.
2. We have a predetermined plan for execution.
Now that we’re limited to trading only within an ideal context (market structure and price conditions), you need to be completely clear on how you execute and manage your trade opportunity.
Consistency in execution requires standard default plans with regards to sizing, entry triggers, stop and target locations. Plus any additional techniques which might be relevant to your style of trading, such as when you will scale in or out, or under what conditions you will re-enter if stopped out. Your decisions may involve some discretion. That’s fine. But this discretion should be built into your standard management plan.
You need to know what to do… and when to do it. No hesitation.
3. We monitor our performance to identify and reduce errors.
Track everything! If you make an error or poor decision, record it.
Look to your longer term stats during your weekly or monthly reviews. If you find something repeating over time, then that is cause for celebration. You have found a way to improve your edge. Find a way to cut out the error, or at least reduce the likelihood or frequency of occurrence.
Image: Error tracking via the Trading Journal Spreadsheet!
It’s not how many great plays you make, it’s how few bad plays you make.
Along the same lines, but for those who are not into sport and perhaps relate more to art, I saw this quote recently which I quite liked:
“The sculpture is already complete within the marble block, before I start my work. It is already there, I just have to chisel away the superfluous material.”… Michaelangelo
Trading success is already there.
It’s just hidden beneath all the errors and poor decisions. We just need to chisel away at them, getting rid of the bad trades and poor decisions, and allow the underlying success to reveal itself.
Trade well,
Lance Beggs
PS. See here also for the same theme – https://yourtradingcoach.org/trading-business/are-you-closer-to-profitability-than-you-thought/