The Road to Optimal Trading

The Road to Optimal Trading

Have you ever felt the satisfaction of adding a new rule to your trading system only to have it disrupt your profit making? It felt as if adding another element to your process would make the right decisions more obvious but instead, trading got harder.

More rules might seem like more confidence but in the ambiguity of markets, too many rules risk more confusion.

Worse however is that many of us rebel against rigid thinking. If we create a system that has too many restrictions, our brains want to declare independence. Once Denise had a client who did really well – right up until he felt guilty for trading using too much tape reading and created a trading plan with very specific rules. They eventually figured out that his very strict set of rules was symbolic of his strict upbringing.Trading strategies and tactics have an important place. Forcing ourselves to “do the right thing” however stems from the “bookloads” of adages about having a trading plan and sticking to it no matter what. Humans obviously are not computers, The attempt to turn us into automatons often fails.

The idea of doing 20 trades in a row, with no deviation from rules, isn’t the promised land.

Faced with uncertainty, we try to create clarity. We even take trades to rid ourselves of the discomfort of not knowing. We think the rules create the clarity but what we need is a road to lead us from novice to expert.

Hard and Fast Rules: Crawl to Walk

  • At this foundational level of trading, the main job is capital preservation.
  • Age-old trading adages matter. “The market can do anything.” “Most day traders lose money.”
  • The trader needs to match their trading plans with both their worldview and the unique way they are learning to see the markets.
  • Traders need analogies and explicit beliefs for markets.

Nuance and Art Rule the Day: Walk to Run

  • During this stage, seasoned traders should start to identify unconscious pattern recognition or intuition around their trading setups.
  • Traders who are open to this can start to recognize repetitive patterns of thoughts and feelings that occur at finite steps in the trading process.
  • At The ReThink Group we help clients do this by asking our clients to learn to answer the Shull Method superpower question, “What am I feeling and why?” As our clients start to become more clear about the answer, they find themselves with less stress and more ability to grow trading and emotional capital.

Optimal Trading: Run to Fly

  • At this expansive level of trading, combinations of thoughts and feelings occur regularly within the context of trading setups or exits.
  • It is imperative to fine-tune the self-knowledge of which combinations of thoughts and feelings are relevant to the trading process and which are less useful.
  • As traders develop their unique emotional setups (forms of visceral intelligence), these cues become trading signals themselves.

Moving from hard and fast rules to optimal trading takes lots of time.

As traders move along these levels, they use more nuance and intuition and less computer-like lists of rules. They follow the map through the four stages of learning. In doing this important work, traders are able to move from trading shadows of the market to trading the actual actual ebbs and flows of the market.

“John has imbued in me a previously missing consciousness and awareness in my trading. This has all but solved my inconsistency problem and has turned wild swings up and down, to calm orderly taking-of-profits. He has helped me leave behind what were ingrained bad habits, like revenge trading and panic selling, and I have had no slumps nor major drawdowns since beginning my work with him. My account balance now very consistently and repeatedly reaches new all-time highs.” – MT.

Author: John Burns, Senior Consultant, Performance Advisor

John’s life passion is optimal human performance. He joined the ReThink team in 2018 after being one of the most consistently profitable options floor traders at the Chicago Mercantile Exchange. John has also been ranked as a top-20 Illinois amateur golfer for more than 5 years. In addition to his role with ReThink, he trades several portfolios across multiple global markets with double-digit yearly returns. He thrives on sharing his knowledge and experience with others and knows how to connect high-achievers — and those that want to be — to the emotions that will embolden their achievements.

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