Shane Blankenship
This is the first of a three-part series in which I teach simple and objective ways to map and follow any market in any time frame. Whether you’re trading ticks or minutes or dailies, trading simply and objectively is equivalent to trading based on the facts, not on setups or predictions or magic numbers. This independence comes by way of seeing and isolating market structure and reading the language of price.
Each trader has their own brand of crazy and we need to see it all cause we can’t improve what we don’t see. The main purpose of a trading journal is to become more conscious of ourselves, markets and of us trading markets. There are many ways to structure it but keep it as simple as possible, personal to your needs and let it evolve as you do. You mainly want to use the trading journal to have a place to be accountable and make observations of your trading. What you find will help you to create any needed disciplines or make any adjustments in what or how you trade.
In the end, we are working towards mastery of our trading craft which requires working towards mastery of ourselves. A trade journal is a tool that helps us take responsibility for everything we think, feel and do when it comes to trading. If you have some resistance to it, just do what you can and ease your way into it. The writing by itself will begin to loosen some things up. In the video, I will give some ideas about how to structure your journal.
Shane Blankenship
We make a trade plan, execute, then evaluate to see what we can learn about price and ourselves. Making and documenting a trade plan helps us to clarify what it is were doing and thinking at the time of a trade, it makes us more accountable. A trade plan can also serve the purpose of holding us steady after we are in the trade and subject to more emotional reaction.
A trade plan is a personal thing that needs to be adapted to you and your trading. Its best to keep it simple. My trade plan just asks a few simple questions and then I take a snapshot of the chart.
Its a simple question that asks why are you doing what you are doing? Don’t just be technical about this, also answer the questions as honestly as you can. If you entered a market cause you were impulsive or because the moon was blue or whatever.. write that down. If you are placing your stop real close cause you are scared of risk, write that down. If you jump out early cause you cant take take it anymore write that down. Don’t be embarrassed you have plenty of company including me now and then but you can be one of the few who actually takes an honest look and learns. Here is a recent trade plan of mine that did not get filled.
Shane Blankenship
The Andrews Median Line is a simple tool that can be applied any instrument in any time frame. It beautifully describes and projects the process of a swing cycle. The Median Line simply bisects a price swing using the relationship from any 3 alternating pivots and then projects price back to its median to complete the swing cycle. If there are two extremes, (opposites) there must also be a center. I refer to Median Line tools cause there are a few basic types of Median line sets along with a some other lines tools. With a thorough understanding of these tools and swing structure we can use them very purposefully fro particular situations.
This is the first in a series of foundational lessons on the principles of trading. These foundational lessons are relevant to any instrument, time frame or methods that you use.
We start with money management. Because if you blow through your money you won’t last long as a trader. Money management starts with self-discipline, which is the first thing every trader should begin to foster. Preservation of capital is paramount. If you’re not currently profitable, cut your trading size down; you have to earn the right to size. Always use hard stops, which means, put in a stop order at the same time that you place your entry order. Know your maximum risk per trade, and stick to it. My risk management is 1.6% of my account per trade.
We will talk about Market Structure in the next part of this series.
A Median Line Setup is a a set of conditions that come together in such a way as to allow you to realize your objective. The thing to remember is that the set-up always serves the objective, not the other way around.
As traders, we tend to lean on setups and turn them into something dead and mechanical. It won’t work, plain and simple; there are too many moving parts. The set will use you, without an understanding of price flow and the attendant conditions. It’s about using your tools, not the other way around.
In order to trade more effectively we need to have a thorough understanding of our tools. This brings me to the Median Line Set which is a widely misunderstood tool.
A Median Line is the relationship between 3 alternating points. It cannot not, not work. It’s this relationship, between the alternating pivots, that defines the median line. Understanding this relationship yields a deeper understanding of price movement. When you draw a Median Line, follow the movement, not the line.
What a Median Line does, is take the A to B pivot which are extremes and then project price back to the center from the C pivot.
Price moves in swing cycles that contract and expand as they go through their process. By understanding this process, we understand the principles of price flow and can then make trade decisions anywhere along the way.