Consistency and discipline with your method are more important than searching for more methods. In How To Practice Part I: I spoke about how our perception of markets gets distorted, and how that affects our skill with markets. No matter how much technical analysis we learn, we will continue to react in the same ways unless our experience of markets changes. The way we begin to change how we think about and see markets can be done through a practice of consistency and discipline. In this video, I show a practice of doing a series of trades the exact same way every time regardless of the result or how we feel. That means knowing ahead of time how we and where we enter, where we put a stop, how we manage the trade, and where we exit. Doing things in a focused and consistent manner will bring personal insight into markets and about yourself.
How To Practice Part I: Learning to Change With Change
This series is taken from portions of the “How To Practice” course I am currently building for Language of Markets and is designed to shift how you perceive or experience markets. Our actions are always dictated by how we experience what is occurring. This is how we can know a lot about markets and trading but remain inconsistent with our actual results. Unless we change how we perceive markets, we will always react in the same way no matter how much we learn about the technical aspects of markets.
This Video is a simple exercise in the S&P 500 and is about not-knowing and learning to change with change. The market just does what it does, there is no reason, it’s just happening and we just follow it. The market is not good, bad, right or wrong, fair or unfair. Developing this kind of experience in the market takes the emotional charge out of needing to know what is going to happen, and needing to be right or avoid being wrong. Your perception of markets will begin to make a shift to perceiving what is actually happening, rather than fear-based projections of what’s happening, enabling more intelligent and consistent actions.
Discipline and Consistency in Trading
By changing the structure of our mental environment, we change how we experience markets, trading, and loss. Through discipline and consistency, we can wear through the ingrained habits that affect our trading results. You may have learned and know a lot about the technical side of markets, but you may still, end up with inconsistent results in your actual trading over and over. We need both technical knowledge and the ability to execute that knowledge consistently.
How and When to Buy a Deep Market Correction, Part II:
In How and When To Buy a Deep Market Correction Part I. I showed a simple and objective balanced swing technique to find a Change in Behavior (CIB) in the deep pullback. In this lesson, we ground the teaching by doing step-by-step practice in stocks, currencies, futures, and Bitcoin. We finish with lining up live examples in some weekly stocks.
Practicing this simple technique will teach you to follow a deep pullback rather than trying to predict it. Make your own observations and discoveries about ways Change In Behavior can be applied.
How and When to Buy a Deep Market Correction, Part I
I use this technique for any deep pullback in any market and especially when the stock market has gone into a recession. It allows me to follow and wait patiently to take part in the next growth cycle while everybody else speculates about nonsense.
When a market is in the process of doing a deep and prolonged pullback, we need some simple and objective techniques to show us when the market is turning back up so that we stay out of bottom-picking trouble. We want to be able to follow a deep market correction patiently through its change, so we are going to use the principle of Change In Behavior (CIB). We will use 2 confirmed balance swings in a deep pullback as our Continued Behavior so that we can determine when price flow has a Change in Behavior. This allows us to wait patiently for volatility to organize itself and show us what needs to change for the deep pullback to be over.
Seeing In Swings
We want to learn to see and experience the market in swings. This gives us a clean and consistent look without all the baggage we add to markets. Swings have a process and components that make up that process. These are the building blocks we used to design methods and setups that will become part of a consistent trading plan. In this video, I teach you how to map any market with swings and to identify the process and components that make up the swing. This is foundational and is always our first step when looking at a market.
Method, Money Management, Mindset
Applying both a reliable method and money management strategy (that fits with that method) in a consistent manner will set you up for the proper mindset to execute that method in the first place. The mindset that is most effective is a relaxed mind. One of the biggest mistakes we make as traders is to think that there is something wrong with us when we keep making emotionally driven trading decisions that get us into trouble. Much of that is due to having no structure from which to make trading decisions, using predictive methods that rely on hope and belief, or thinking we should be able to jump in or out at every turn. In this video, I try to get across how method, money management, and mindset come together for me when I’m doing it all properly.
What Is A Trading Setup?
A trading setup is a set of conditions that come together in a particular way, indicating a probability of one thing happening over another. It’s like a weather event that happens when certain conditions come together in the atmosphere. First, we must define the conditions within price flow so that we can recognize them coming together and follow their process. The conditions we will use will be 2 of the market structure components that make up a swing. In this video, you will learn about the gap impulse and the shelf and how we can lean on it after certain conditions are met.
How To Structure a Trade Plan: WEAT
This is a Clip from one of our Language Of Markets Live Sessions. I show how to structure a trading plan from beginning to end using a daily WEAT chart which is an ETF of the Wheat futures market. Having a plan of the things you can control goes a long way when it comes to your trading consistency and conserving phycological energy. See Foundations Of Trading Part 6 post for more on trade planning. Your trade plans will be unique to your needs but you can use this as a guide.
Basically, know your method and design rules for:
- Entry: Know what gets you in
- Initial stop: know where your stop goes
- Money management: Know your position size and trade management after in trade
- Exit: know what gets you out
The Gap on the Left
In this video, I will show you a simple visual way to read the flow of the market. Big Gaps are easy to see on the chart, our eye naturally gets drawn to them. A gap is a quick supply-demand imbalance that pushes all the guessing traders (contraction) into or out of their positions (expansion). Use this simple framework to make observations then create your own ways to trade it using those observations.