Process Thinking and Your FX Trading

We are in a constant state of process. Everyone has realized a goal driven period through which they have engaged in a series of (neg/pos) experiences and produced a positive result.

We typically refer to a series of experiences connected to a desired outcome as “a process” when the time duration does not fall within our expected period. The fact is, there is a higher probability of a positive outcome when the process is well planned and endured.  What is not so obvious, particularly in real time, are the finite details involved in the process of which most are not consciously aware. It is the details that are critical to the success of the process. The more conscious one becomes of the finer details, the more proficient they will be with each task involved in the process.

You don’t know what you don’t know… what you don’t know contains experience and information that will increase your level of success when the process comes to completion. In trading, what you don’t know represents risk. Ask any aspiring trader who loaded up an account 6 months after first reading the word “forex,” then reflected on the action a year later.

I believe everyone has experienced a successful process that resulted in achievement. I believe everyone has a template for success. I do not believe that everyone recognizes the factors contributing to their success. Thus, they have difficulty converting what they already understand about process, and its foundation for success, into trading development.

When pursuing a new venture in an unfamiliar domain (trading?), the new experiences in the process (exploration) are the finite elements that can draw on your resources, challenge your psyche and pound you into a state of frustration (copy me systems, etc.) and discourage you from your goal.  –please refer to “Developing Traders Model” video in the free member’s area.

Everyone has intensely experienced “the process,” whether you are aware of it, or not. Some have engaged in a process inspired by a goal. While others may use a natural gift and move in the direction of where they are skilled, which puts them into a process, by default.

There is a long term performance differentiation between winners and not winners by the effort one makes to become process conscious and process oriented. As life goes, we are in a constant state of process in one area of our lives or another. The differentiation is in favor of the individual who, when engaged in a process toward a defined goal, is aware it IS a process and understands deeply how each element contributes to the whole. The winner is conscious of what is happening around them as they relate internalized experiences and wisdom to what is happening in real time and how to prepare for the future.  The winner makes an intentional effort to deeply understand each constituent part and how the part contributes to the achievement of the goal, or solution to the problem. Over time, process becomes a model that brings structure to progress. Once one becomes aware of the fundamentals of process, it can be applied, and cross applied, to almost any endeavor. I was an athlete in my previous career. After years in Track and Field, and 14 years in bobsledding, the mental and physical process became a well tooled machine. When I turned to trading in 1998, I applied a structured development process, learned from sport, to my passion in trading.

When I was bobsledding, prior to a race, we had a spectrum of factors to weigh precisely into how we were going to execute. Each factor is more comprehensively understood when put through a series of structured experiences and testing (like trading). The ultimate defining moment to draw conclusions would be a race environment when all the tools and experiences are being collectively optimized. On the world cup tour, each week we would arrive at a venue five days before competition. I knew, to the finest detail, exactly how I was going to proceed through the training sessions in preparation for the race. If the plan was clear at the start of the week, then I had a greater capacity to adapt and adjust to any environmental changes or surprises, which can be expected at every race.

The importance of doing everything within your control to have every detail prepared does not apply simply to the functional component (equipment, athlete preparation, etc.), but more importantly to the ultimate control center…. The Psyche! At the start of each world cup week, I needed to have my mind in a specific state as it pertained to the task at hand. The process started from the conclusion of the previous race. My mind would immediately shift to the next race and I knew, exactly, in what state of mind I needed to be throughout the entire preparation period. Among the web of complexities, I needed to be prepared to deal with any matter. The night before the race, I had to be absolutely clear in how I would execute at race time. I would fall asleep thinking about the finest details, the rhythm of the track, speeds, G-forces and violent transitions, so while I slept, my subconscious would sort out any loose ends and reveal them to me in the morning. My first thought in the morning was to mentally connect with the task. There is a discipline in avoiding thoughts of outcome expectancy. Outcome expectancy blocks your mental capacity to see everything clearly and uses up vital mental energy. Once you start thinking about outcome, there is an emotional and physical shift that will fully compromise the performance.

If I was not nervous/simulated/focused enough, I knew what I had to do to move into the proper state of mind. If I was too nervous/anxious, I knew how to realign my thoughts to reduce anxiety levels back into a balanced state. After spending a lifetime in sport, I knew exactly what to do to bring my mind into an optimal state to be most effective in executing the task at hand. We could be traveling 140+ k/h and pulling 5-G’s, yet my world was in slow motion. Only an intimate knowledge internalized from experiences would give me the ability to be in a complex environment in slow motion (trading?). Once the process has been established at the highest level, I simply repeated the process every race. Each race contributed to the refinement of the process and more intimate understanding of the details in the success formula.

Structure a development plan that targets specific parameters of the market and internalize the behaviors and patterns, be it price action or fundamentals. The same applies regardless of how you see the market. Only through well planned experiences does a growth process occur. Experiences establish reference points that become new parameters. One experience builds on another. Large sample sizes of experience will develop the trader within you and draw out your trading personality and independent thinker, because you will own your trading. This is the goal of Pro Traders Club. To understand the market so intimately, it will play out in slow motion. Your trade selection and trade management will be in slow motion, because you will have lived through the scenario so many times.

Hopefully, while reading this analogy, you’re thinking of its application to trading. There are no shortcuts. You can’t copy what somebody else does. You need to engage in the development process yourself. You need a development plan, from which evolves a trading plan. Almost everyone does it backwards, at first. The sooner you switch, the sooner you will be on a progressive road. One of the biggest deceptions in the industry is the preaching of the “trading plan” as though it’s something you pick up off the internet and start trading.  A trading plan does not come out of thin air. A trading plan cannot be copied. A trading plan is a slowly evolving structure that is a byproduct of a clearly defined development plan that is in forward process. A trading plan starts at ground zero and, evolves slowly with hard work, through engagement in structured and defined experiences, collection of empirical data, and maturity of ones psyche as it relates to trading. Structured experiences aid in internalizing the market behavior so the trader develops within you. With process and experience, the trader lives inside you and you draw on it when the appropriate time calls. Done properly, the trader within cannot be taken away. It lives in you, just as experiences from other areas of your life. It’s a process.

When you pursue a diligent process oriented approach to studying price action, it is you and the market. It is you that interacts with price and pick up its behaviors under various conditions. By nature, as all your experiences are between you and the market, your mind uniquely connects with market behavior in a way that only you know. You develop and intimacy with the market you cannot explain to others. You connect with patterns that you have identified or validated all on your own. Here is the climax of it all…  by nature of the process, your unique psychological profile has now connected with the market that is defined on your own terms. You have now accumulated a collection of experiences that make you true, an integral part and place in the market. You are now an INDEPENDENT THINKER!   This is the goal. This is when your trading accelerates. This is when you look back and realize you can’t be someone else. That the trader within you has been born, but you had to work hard to bring it out.

We have all been through process. Process can be made a template for success when properly understood. The effort should be made in understanding the process of previous experiences to convert and customized the model to achieve a new goal. Use your existing success and convert the process to trading. You will win. You already know how!