Develop a process loop | stockbee

10/01/2010

Develop a process loop

Modified from my post on Members site yesterday....

Develop a process loop....

What do all successful traders do, they follow a process again and again and again. They have a process to analyze market, they have a process to identify long or short opportunities and a process to manage their position. They just keep looping that process.
For example everyday I have a process loop that I follow. Run Top 25 breakout, IPO, Episodic Pivots, and 4% bearish scans from 10 till 4 pm in evening during market hours. Every few minutes the process is repeated and then I identify opportunities out of them. Then again run the scans and again and again do the same thing.
What does the process do, it throws up opportunities like these regularly.....

QNST
MAN
ESI
STKL
GTE.
alt text
Once you identify opportunity like this there is a process loop to research them, decide on target, set target, set stop, and then entry happens. Once in a trade there is a process loop which manages them on regular basis to close them at profit or loss. Day in and day out this process loop continues during the day. Once you setup the process all that you do is to play it in loop again and again and again.

Same way what does Tumbler do (Tumbler is a member who primarily day trades using news) , he has a process and he loops it multiple times in a day and keeps finding opportunities. ( As a side note he has potential to become very good and very high earning trader if he learns couple of more tricks of the trade and gets more buying power and joins a prop firm.Do you know of anyone who can find these kind of opportunities day in and day out and make money on most days)
Same way Mother has her process loop. Her specialty is IPO. she has a process to identify hot IPO, enter them, and exit them at right time. She has her own niche and way of doing things. She uses her own set of lists, scans and does her own thing and finds opportunities on consistent basis. At any given time she has 20 to 25 opportunities like this in her portfolio and she grinds out profit, months after months using her process.
DC is another person who has a process and he has gone further than most people and actually developed a software to speed up and simplify his process (Patientfisherman Bluefin). What does he do , he runs his Bluefin scans and finds opportunities throughout day. We have been in extensive contacts with each other  since the Members site started and he has really worked hard to put a very well thought out process to find high R/R trades. Besides that he has perfected the process for mutual funds investing in retirement account and you should ask him how much money he made using that process last year. Or ask him how much is his IRA up last month. He does not talk much about his returns and whines about his bad trade , but that is his public face. The reality is he is very process oriented and once perfecting his process, he has  in last few months gone further. He created a software  to speed up and automate his process to find high Risk/Reward setup. You can see the outcome of that in his Bluefin scanner.
BH is another trader who does his own process things and manages to juggle his job and trading successfully. He was one of the most active participant in the Episodic Pivot bootcamp and after that he worked hard to setup a process to trade that particular method. It suits his life situation where he does not have access to many scans and sites at work site and has to be extremely selective in taking trades that can last few days or week. By trial and error he has perfected his own process loop and he keeps playing it again and again.
Like this there are more members here and every month more people keep joining the club. All of them go through same stages of being lost, then finding a process, perfecting it and then they become confident.
Today I got a email from a member who joined some months back and in the beginning he was such a pain, because he was critical of everything, He would spend entire day sending bunch of emails whining about things like Telechart is useless software, your Market Monitor is useless and on and on. After few weeks  I told him look just focus on process , there are no perfect softwares, perfect sites, perfect  tools that will satisfy you,  you have to make it work. Finally he got it and then started becoming successful after setting up his own process. Then he stopped complaining. His process worked very well last month as it was designed to milk such periods and   he cleaned up in  last one month. So he sent me email last night saying how easy it is to find opportunities using Telechart once he got the process right and how easy it is to interpret MM now. He has developed his own process and is on auto pilot now.
I can give you examples after examples of this. But the gist of the story remains same , they developed a process loop and they just play that process again and again. If something does not work they change the process and then start playing the loop again. As against those who do not get it spend their time following Crammer, worrying about national debt, deficit, or generally flirting from one method to another and never spending enough time on simple methods to get the process right. So they run their own process loop of not having set process and then complain about market and so on
Some trade very different strategies from my strategies. While I am primarily 5 to 30 days kind of swing trader, some are day traders, some are swing traders, some are prop traders but the common thing is all those who are making money are  process oriented.
So if you want to be one of those succesful traders like so many of them around here , become process oriented. Develop a process and keep looping it....

1 comment:

Elingford said...

Hey Pradeep,

This is how I apply the concepts that I have learned from your site. The information is found in the following post on my blog: http://parttimeswingtrader.blogspot.com/2010/10/one-of-my-best-ideas.html

Can you please look at it and give a comment!