A Good System Relies On A Robust Trading Process

A few years back I started teaching a 3-day Forex Systems Workshop based on three systems I actively trade. The systems use a precise set of pattern based rules so traders can adopt the systems fairly quickly. Trading systems that are based on visual pattern recognition, you need to learn to identify these patterns. With some experience, traders are able to discern a very good pattern from a below average quality pattern. The human brain is wired towards successful pattern recognition and the subconscious mind (right brain) is very good in this. Still, there is some learning required to teach your brain with pattern examples. This situation compares to professional chess players who build mental libraries of memorized play situations.

Typically, attendees left the workshop after class with lots of enthusiasm for trading the systems. The workshop includes practical trade examples (screenshots) and live trade simulations (based on historical price data) so that students learn to recognize the chart patterns and apply the rules. I believed that this was what students needed to successfully implement everything back home. That was true — but I found out later — only in part.

Professional traders reported that they were able to trade the systems consistently profitable within 1-2 months of attending the workshop. A good part of other students, however, reported that they were confronted with some physical and mental challenges and they got stuck in their implementation. Some even mentioned that they ended up not trading the systems at all. Why were the results so different? Clearly, some aspect was missing!

If you have ever attended a trading workshop, you might have experienced something similar: what seemed so obvious and easy suddenly becomes difficult once back at home with all the subtleties and details of getting the systems to work. As an instructor, I had to learn that understanding the rules and recognizing the visual trading patterns in the classroom is quite different from being able to actually execute trades at the monitor some time later.

As “learning the rules” alone did not complete the full picture, I realized that traders were missing the complete Trading Process. Over several years, I had developed my own processes supporting my trading. As this was a gradual development over time, I only began to understand of how important it was for my results. Now I would say that your trading process is as important as the systems themselves. Without a good Trading Process, many students will have trouble executing any system efficiently in the short-term. With time, though, everyone can develop their own process. Students will be successful sooner at home using a robust & efficient Trading Process. Obviously, full time traders have already created their own process which makes trading a new system easier and a faster experience than for novice traders.

The Importance of the Trading Process

What does a Trading Process look like and what are some of the activities? Traders are different and they develop their own routines to fit the needs of the systems they trade. Here are parts of the Trading Process that everyone needs in some way:

a) Morning Preparation Process:

This is probably the most underrated activity for most novice traders. It is very important to get you into an ideal mental state for trading similar to how an athlete prepares for peak performance in competition. I focus on achieving a high consciousness state of Acceptance (well beyond anger and fear). Such a state makes it much easier to attain peak trading performance. Van teaches several ways to do this. In class you are going to run through my process – later you can experiment what works best for you.

b) Higher Timeframe Analysis:

The entry chart is not the only chart to look at. Analyzing several higher timeframes (multi-timeframe analysis) is part of the core rule-set. As well, it will provide you important additional edges — especially when trading Forex. Think about what you need to look for to add additional edges from the higher timeframes. There are multiple factors. For example, entering a Long position that is supported by uptrends in higher timeframes. In addition, determine stop-run levels, Bid numbers, dynamic as well as static support & resistance levels as some of the important factors on those higher timeframes. This top-down analysis allows you to determine upfront if a Day trade has the potential to be transitioned into a Swing trade (possibly lasting for weeks or even months). These are the type of trades that have the potential to provide you big R-multiples beyond +10R.

c) Short List Generation:

There are always good trading opportunities in the markets in several timeframes on any given day. How do you identify the best ones without getting confused, delayed and stressed out? Any of these will lead to drop your mental state to levels no longer appropriate for trading. You want to end up with a short list of the best opportunities quickly. Think about applying certain activities that include rapid pattern recognition, priority examination, and some filtering and elimination techniques. Initially, this will require a good amount of conscious effort (comparable to learning how to drive a car for the first time), but with some experience, you will execute this step quickly.

d) Opportunity Scanning:

Your scanning should be fast and efficient while going through a large number of potential opportunities. It should prevent you from missing out on good trades and support you in minimizing your trading mistakes. I have found certain ways you can best utilize the unconscious mind so that patterns pop-up in front of your eyes with little or no conscious effort. In addition, organizing the charting platform with certain scanning templates helps a lot in my style of trading.

The Live Trading Workshop is a Combination of Theory and Practice

The Live Forex Trading Workshop, following right after the Forex Systems Workshop, combines both theory AND practice. The theoretical part is about the Trading Process and explains the trading activities you need to perform. The practical part shows you how to perform these activities and puts the student into the driving seat. Since I began teaching the 2-day Live Workshop, students have reported that it has played an important role in their trader development. And I have definitely seen traders’ success rates go up. Usually about 2/3rds of the System Workshop attendees stay over for Live Trading. What can you expect during the 2-days of Live?

Analysis and Trade Selection:

In the morning of the first day of live trading, we focus on how to analyze Forex pairs in a top-down manner (this needs to be done only once a week). Then regular bottom-up scanning is performed several times a day for different timeframes. The combination of top-down and bottom-up provides you a short list of good trade opportunities. Often you can quickly weed out setups as they do not fulfill a certain rule. Other patterns might require more of an evaluation determining good or not so good trade aspects. It is during this step, the trade-off, that discretion comes into play. Filtering the best setups from 26 currency pairs tradable in five different timeframes with three systems provides a lot of opportunities to look out for — just short of 400 potential trades for every scan. The trick here is to come up quickly with about a dozen good to great trading opportunities to focus on (this is a process that takes me less than five minutes and it can be performed several times during a trading day).

Once you spot a good setup that fulfills the rules, you learn how to frame the trade and how to begin the stalking process. Part of trade management is entry, initial stop placement and exit management. Individually, each of these is not a complex activity. Performed together in rapid progression, however, they can become challenging. Though I move in “slow-motion” while explaining the process, usually some confusion & frustration initially sets in on the first day. Why is this? Students need to process a lot of unfamiliar information and some loose ends are only starting to get connected. Through repetition, this clears up during the last day of workshop.

This second day is a day full of trading experiences! Scanning the market for certain visual patterns is only the first step. Then additional rules need to confirm the pattern such as higher timeframe alignment. You learn how to frame, stalk and manage trades. We will do each of these a number of times together while we also discuss trade ideas and evaluate emerging trades.

Live Trading Platform Provided:

As part of the Live Workshop, you receive a custom-programmed charting package based on the MT4 Forex platform. This package includes custom built profiles, self-developed indicators and templates for scanning and analysis needed for my systems. This is the same scanning and analysis I use for my own charting. The MT4 package will be installed on your laptop by the day before the Live Workshop starts. So you are ready-to-trade your demo-account with real-time Forex data on the very first day. Having a smooth start, you will be able to analyze charts and apply the rules to trade the systems (as of mid of the first day). Having set-up the charting, scanning and analysis platform is typically one of the first major hurdles students are confronted with while not having attended the Live Workshop.

The Trading Results from Live Trading Workshops

August, 2018:
During the most recent Live Trading Workshop, we identified 22 trade setups in each of the 5, 15, 60 and 240min charts from all three systems. After evaluation, we reduced this opportunity list to 14 high quality setup patterns. Of those, 5 patterns finally triggered entries which then generated an overall result of +2.8R for the day. Though we did not have a Big R multiple result this time, the two days were full of learning & growth.

November, 2017:
This recent Live workshop was unique in that a rather small number of trades were taken (only 4 entry signals triggered). However, one trade really stood out in terms of R-result. It was a System 3 (3TMA) trade with a Long entry on the 15min EURCAD chart. As we had priorly identified several stop-run levels on the 240min chart, the price just did that breaking through the levels fueling a strong follow-through in trend direction. We were able to transition this day trade into a swing trade that finally ended as a +11.6R winner (it only got stopped out after the workshop).

Watch the video on this Big R winning trade (EURCAD S3 15min Long)

October, 2014:
It was almost difficult to keep up with the rapid succession of trades coming up one shortly after the other. Overall, in this Live workshop we had 18 trades during the two days with an overall result of +21.8R and an 89% win rate. Clearly these were great trading days.

Read more details about our 18 trades in the article “Rich Man’s Panic”

Use Your Trading Process to Fully Capitalize On Your Systems’ Edges

Trading the systems taught in the workshop already provide you multiple edges in the markets. However, to fully capitalize on those you also need a robust Trading Process that works hand-in-hand with the systems’ rules. This combination makes trading much easier and makes your trading profitable sooner.

If you plan to attend a Forex Systems Workshop, then I recommend you to join as well the 2-day Live Trading Workshop. Unfortunately, novice traders tend to shy away from these live workshops as they think not having yet the trading expertise required. Actually, novice traders learn the most and will experience lots of A-HA moments. More experienced traders will benefit from other of the many aspects that Live trading situations provide.

One student mentioned once that he fully understood the inner logic of the patterns only after having attended Live. During the Forex Systems Workshop, the three systems will thoroughly be explained. For many, perhaps that is all you need. If not, the Live Trading Workshop is a value added step that can’t be matched.