To make lots of money create structure and process flow

Creating structure and process flow in your trading helps you stay focused. In absence of structure mind tend to wander all over the place. Aimlessly flirting with stocks to stocks or trying things for few days and abandoning does not work in trading.

I know this first hand from my trading in first few years. Ever Since I have put together structure and process for my trading , trading is effortless way to extract money from the market.

Typical losing trader or new trader are too excited by any new idea without researching it. Monday they get excited by stocks near 52 week high because they read about it on a blog.  Tuesday they read somewhere it is best to buy 52 week low. Wednesday they like all time high. Thursday they like low priced stock. Friday they like high priced stocks. Every Saturday and Sunday they have some new new insight.

In the process valuable time and effort is lost and not only that you lose capital and confidence.

This kind of behavior is symptom of lack of structural understanding of the market. Unless that is fixed you are unlikely to make money in the markets. Once you put in an effort to understand that you will find making money is easy.

First step to profitability is to understand structural anomalies in the market. Structural phenomenon in market do not change easily.

Stocks move in momentum bursts is structural phenomenon (based on that I trade momentum burst and anticipation setup). Stocks react to surprisingly good or bad earnings is structural phenomenon (earnings breakout setup is based on that). Neglected stock make big moves when catalyst shows up {EP setup is based on that). Stocks move in direction of range expansion (4% and $ breakout setups). Range contraction resolves in range expansion (basis for anticipation).

Structural phenomenon like these do not change. They have persisted for hundreds of years and will persist throughout your life time. When you own up one of these structural phenomenon and build trading method and process around it you will find better success and less stress. That is if you are really serious about making money trading.

You can be a discretionary trader and still have a very systematic thinking process to arrive at decision. You do not have to be mechanical trader to have structure and process. You can set daily or hourly process. You can create checklists. You can have stock selection criteria.

In absence of processes and structure your mind gets occupied by whatever is readily available. It becomes susceptible to improvise on the fly. It gets influenced by success or failure  of a trade. It flirts from ideas to ideas. In the process there is no growth of your capital.

Put a process and methodical framework around your  trading. It helps you  stay focused and helps you stay within self imposed boundaries. There is some sacrifice involved in this. You do not need to trade all structural phenomenon. You need to make conscious decision about time frame you want to trade and the structural edge you want to focus on.

I know many things in trading that work. I talk to many successful traders. Many very well known and successful traders are members of Stockbee site. They trade differently from me but all have structure and process in place.

In trading there are so many temptation, there is environmental noise , there is constantly changing market and complexity. The complexity kills many budding traders. That is where structured, formatted and regimented approach is what is needed. If you want to make money in 2019 , put structure and process around your trading. 

For example I have a very regimented approach for after hours analysis and it stays same for days, same thing for pre market analysis. Similarly during the trading day there is a set regimented routine. Lot of thinking has gone in to designing that regiment and I do not make changes to it for the sake of changes.

If you want to make millions trading  start by putting a process and structure around your trading.


Unknown said...

easier said than done.

Sterling Green said...

Absolutely spot on and thank you for your advise.

Unknown said...

everything written is very true! each work has its own instructions that you need to follow, for example, the pilot of the aircraft does everything according to the instructions. and there are no errors. But in price preloads to the support or resistance level there can be false breakouts. Yes there is a price channel and out of it.