1) Identify if it’s one of three types of days: is today a day to make money, limit losses, or do nothing? Now, after you’ve been trading for a couple of months, you’ve pretty much been able to identify which one of those types of days it is. It’s not secret information, nothing mysterious. Traders get a feel for whether it’s a day for them to make money, limit losses or do nothing.
2) Build macro-awareness! Look around and identify what current market events are in play. Are there any news releases that are coming out that are important and relevant? Are there any current events going on in the world that could affect the market unexpectedly?
3) What is the current trading thesis or game plan? Are the trades that I have in my portfolio (a) in-line with the theme that I have for the market and (b) are they sized correctly?
4) Look at what they did well that day. And I want them to examine their performance objectively. Did you size into trades correctly? Did you stick to loss limits? You could have lost money all day long, but if you took smart, good losses, then you actually did something well that day and you traded optimally.
5) What did they do poorly that day? This is where they can become critics of their performance. Did they get distracted? Did they put a trade on because someone else had it on? Did they trade out of fear or anger? Did they become over-confident and put on a sloppy trade?
6) The next step, I have them do is to look at what’s actually making money in the world. Which markets? Which products? What type of style? Are the markets range bound? Are they trending? Are commodities making money? Are equities making money? I want them to look around and see where and what money is flowing into.
7) What’s not making money in the world. This helps them open their eyes to the reality. For example, if my client is great at trading trending FX markets but range bound fixed income markets are getting paid, then that’s a huge indicator to the traders that they need to size things down and wait until their strategy is getting paid and the markets are in-line with their trading edge. Having that patience and discipline are skills anybody can learn to do. It is just a matter of having the self-discipline and awareness to do it and the journaling process creates that for the trader.
8) What lesson did I learn today? Every day that they trade they need to retain some new piece of information, some new approach, some new thought and take note of what lesson the market is teaching them.
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