Stop Losing:
Create Your Sh1t Trade Playbook
A Simple Process to Eliminate Bad Trades
I’ll cut right to the chase…
You probably don’t need more winners, you need fewer losers.
We all fall into the trap of searching for the next great trade, and that’s important, right? The equity curve can’t grow without winners.
But, for many traders, the biggest challenge to equity curve growth is the impact of losers.
It’s like an anchor dragging your performance back…
You’re swimming like mad, making good trades but those damn losers just hold back real growth.
Enter the sh1t trade playbook…
Shine a Light
Alright, so, hat tip to Anthony Vallone (listen to my conversation with him here), a long-time member who came up with the name…
Shining a light on your worst trades might be tough, Tom Hougaard calls it a “pain diary” for a reason.
But it’s a must.
Why?
Because the positive impact on your P&L if you just reduced those awful trades by just 25% is huge, let alone culling them completely.
By analysing every detail of your worst trades you get to learn from the mistake and avoid it in future.
Cliché?
Maybe… but true nevertheless.
Here’s the process…
The Process
#1 Take your top ten worst trades from the last quarter
The real stinkers that just didn’t work (take whole days if you are super active.)
#2 Print off the charts
Weekly, Daily, Hourly, and lower time frames.
#3 Check the data and economic calendar
Now review the news flow and economic calendar during that time (to understand the context and engine.)
#4 Label each chart with a ‘regime’ tag
Was the market trending, range-bound, choppy, or news-driven?
#5 Check the time and day
When did you take the trades?
At the open? The close? On a Friday afternoon?
#6 What was your performance like prior?
Have you previously had a good run?
Were you in drawdown?
Been on a break?
#7 Anything else?
Does anything else stand out from these trades?
An unusual market, more size than usual?
Did you add to the trade?
Anything you can see that’s important, note it down.
By now you’re almost certainly going to discover something…
Perhaps a common thread, or a few variables that contributed to the losers.
Then once it’s glaring you in the face, guess what?
You avoid that situation in future.
- Are you frustrated by choppy markets? Add a filter to dodge them
- Take big hits after a good run? Take note and trade with caution after a good week
- Always get caught fading trends? Make a rule to never fade a market that’s trending.
You get the idea…
Often you only need minor adjustments to your method to have a big impact.
Try it, let me know how you get on…