The TRUTH About Most Trading Strategies Revealed

Hi, Brian McAvoy with Inside Out Trading. And today we're going to talk about something that's. It's a common, super common mistake that traders make, and it really hurts a lot of traders, makes things way more difficult than they need to be. And it's a super basic thing, but it kind of goes back to how are you trained to be a trader? How are you as a trader? And here's what I'm talking about. It's a common wisdom. It's been around for decades. But a common wisdom is make sure that you document your system, document what you do. Super important. But the funny thing is, years ago, I ran a survey and I was amazed. When I asked, it's like a survey, the list. And I was like, okay, do you have your system documented? Most of the people, I think it was like about 70, 80% said, well, no, of the remaining people that said they did have a document, I said, is this actually what you use? This is what you do in your trading? Like, well, not really. And there were very few people that actually had documented what they do in their trading. Super critical thing for you to understand. A couple of things. If consistent profits and confidence and going to the markets knowing that you're going to make money is a big deal for you, if it's important to you, this is really, this is a critical matter. When you're doing something over and over again. And with trading, it's a mental activity. So it's even doubly impactful. If you're trading from memory, which most traders are, because you don't have it written down. What you do, because you're trading from memory, you're leaving yourself open to a whole bunch of things that work against you. The first of which is just plain assuming that, oh, yeah, I know my system so well, yeah, I don't have any problem sticking to it. I don't need to write it down. That's a huge mistake. And here's why it's so easy. Let's say you cruise along one week, everything's fine, winning most of the time, ended the week, it's okay, yeah, I made a profit. But the next week, it's a rough week. And so there's a part of you that's saying, man, something's not working, I want to fix it. So you make a little change or two. You maybe make another change or two and, oh, okay, maybe it gets better, maybe it doesn't. But then you go into the next week and now you're sitting there like, wow, what was I doing two weeks ago because last week I was doing something different. I don't remember everything. And so it's so easy to forget where you were a couple of weeks ago when you had the good week. Maybe it was three weeks ago they had that good week. How are you going to remember that? I mean, good grief. A lot of times a lot of people have a hard time remember what they had for dinner last night. So how are you going to remember what you changed in your rules from two, three weeks ago when it was working and you've been wrestling with it since? Yeah, that's a problem. One of the big variables that traders throw into their own mix that makes again consistent profits challenging is again, they don't have what they're doing documented. So they don't have that really good, solid reference point to something to refer to, make sure that they're sticking to what works. Now this goes back to my quality assurance. This is why in the business world, in the military, anytime you have a lot of people that you need consistent execution of things out of, you need people doing things the right way. What do you do in business? What are you in the military? I love using the military because it's a great example. You got tens of thousands, hundreds of thousands of people and things need to be done the right way by everybody, not everybody doing it the way they feel. Like you have procedures, written procedures. This is how you do this. And when you buy a product, they don't ship you the box of cards and say, here, figure it out. No, they send you a list of instructions. Yeah, written instructions, or at least maybe a video. But it's super important if again, if your goal is consistent output, and for almost every trader, especially if you've got a strategy like you want to be able to take that strategy and go to the markets and execute it over and over and over and over again. If it makes money. Right, you want to be able to repeat on that and repeat on it consistently. Well, writing it down is like the super first basic step again from quality in the real world, where it was my job to get consistent performance out everybody. That's what I bring to trading. Writing things down is like the very first thing. So it's super that you do this. Now the other reason you don't want to be trading from memory. Let's say you have a super simple system and you maybe you're not messing with it all the time, but again, you're trading from memory, you don't have it written down. Here's one of the other traps that you can run into that again, works against you. If you're always just trading from memory, everything resides in your head, including all the filters through which you take in information and make your judgments and decisions. If everything's just floating around in your head, let's say, yeah, again, you didn't sleep very well last night and it gets some indigestion because the soup just didn't sit right with you. The spouse was acting up and just, man, you're just really feeling a little off today. Well, if everything's just in your head and you're not feeling so great and maybe, you know, you're not in that great of a mood, when you're looking at the charts, you're going to tend to interpret what you see with a negative bias. It's just going to seem not real optimistic. And that's a bias that you're going to be putting on the markets, not the markets. So it's going to affect how you interpret what you see and subsequently the decisions that you make about your trades. Now on the flip side of it, let's say, yeah, man, yesterday was great, had an excellent dinner, had a fun time with a wife, got laid, slept like a baby, man, you just, today you're just feeling awesome, but today the markets are in a bearish mood. Again, if everything's just floating around in your head now your filters are saying, hey, positive markets are going up, man, things are looking great. And so the problem is if everything's just floating around in your head, you, you're more likely to bias what you're seeing than if you have things written down and written down clearly and specifically. The more vague things are, the more general they are, the more just in your head they are. You're going off a memory. Those are variables that work against your goal of consistent profits and your goal of being able to take your strategy to the markets and make money with it consistently. Knowing that, yeah, when I place a trade, I know what to expect, I'm going to make money this percentage of the time, I'm going to be right and it's going to be a winner and I should expect this profit to loss ratio. You're going into the markets with knowns and that's why writing things down is super important for consistent output out of a process which trading is some you're doing over and over again. And that's why the wisdom is there. Document your system. So it's not always an easy thing though to document it. Well, I mean, again, I'm A quality assurance manager. This was at the heart of my job, was working with people, had 183 people I was responsible for to get over seven different departments, four different shifts to get consistent performance to best practices out of everybody. So this is something that again I was able to bring from my quality job to trading. And it's, that's what allowed me to turn my trading around and really get a solid handle on it. So I want to teach other traders and it can work for you. And the funny thing about it is writing down your system, a lot of times it is way tougher than people think because it's not something we're taught how to do. And again, this being an area of expertise of mine, a while back I sat down and listed out all the different characteristics that make a process really reliable, producing very consistent and predictable output. There are 14 different characteristics. And with your system, the thing is, if what you're working with is lacking these characteristics, it's going to increase the variability of your results and lessen the repeatability of it and the predictability of it. And a lot of traders are what they're working with, it's highly variable, just the strategy then the system they think they have, it's got a lot of variables to kind of built into it. And so when you can take what you're doing and you can define it and make sure that it has all these characteristics of a really good, highly repeatable, highly predictable output process, that's when you have a maximum advantage as a trader. So if you'd like to learn how to do this, swing by insideouttrading.com book a call with me and we can talk about what's been going on with your trading and if you want some help with this, what that looks like, so. But it really is super important. Trading's important matter. This is not something to take lightly. A lot of people or a lot of traders, they very sadly dismiss it thinking oh no, I don't need to do that. And they pay a price for it. And the price isn't just financial. The price comes with the failures, the mistakes, the lack of results. And there's a price that goes with that. That's your psychological capital, your emotional capital, your how you feel about yourself, self doubt and all that kind of stuff. So take it seriously. If you get some good help, if you want my help with this kind of stuff, this is what I do and I've been more than happy to help you out. I want to see you make it as a trader so I hope this has been helpful. If it has like I said, book a call with me. Swing by InsideOutTrading.com it's right up there. InsideOutTrading.com up at the top of the page. Links Book a call with Brian. Book a call with me. We'll talk about what's going on with your trading and the best path to move you forward. So get you past the obstacles, get trading working really the way you want it to where it's contributing to your life the way you want it to. Also if you like this video, if you would give me a like and a subscribe and go and subscribe to my channel down below. I make these videos I publish them every week on how to be a more successful trader. The pitfalls to avoid what to do about them if you're running into them. So if you like this kind of stuff, subscribe to my channel. Got friends who trade share it with them and I got other freebies at my site that you can get while you're there. So again I hope this been helpful. Talk to you soon. Cheers.