A few years ago, I put together a book called Trading SOS.
Here it is, as a blog post:
Alright, let’s get this out of the way:
—> You’re here because things aren’t going well.
That’s OK.
Take this as a chance to step back, take an honest look at what’s going on, and then step through the process to isolate the most damaging elements of your trading and come back in better shape.
Think about this as a chance to save your business. If you don’t do it, nobody else is going to step in and do it for you.
Here’s a brief breakdown of the steps you’ll be working through:
- Stop Trading
- Your Minimum Viable Strategy
- Hard Analysis
- Soft Analysis
- Self-Assessment Quiz
- Identify Your Loose Screws
- Tighten the Screws
- Your Comeback Strategy
I often refer back to sports analogies.
This period you’re in right now is a little like a player who’s being benched because of poor performance.
Sometimes, that kills the athlete’s career. They never figure out what’s going wrong or what to do, and they never come back at a high level. Chronic issues can go on forever.
But if it’s done correctly, the athlete comes back even stronger than before.
The key difference is how the player spends their time on the bench. Simply taking a break and licking your wounds can help you feel a little better – but it won’t address the core issues behind the poor performance in the first place.
I’m a big believer that the players who face adversity – then actively work on improving their game – are the ones who go on to play at the highest levels for years and years.
The players with chronic behavioral issues who don’t get help?
They’re the flops. They’re out of the league in a couple of seasons and they never build real legacies.
That might sound a little dramatic, but that’s the way I see these moments.
If you consistently fund a small account, blow it up or bleed it out, and then repeat the process over and over….that’s the definition of insanity, right? You’re repeating the same things, expecting different results.
So I’ll wrap up this intro with a question for you to marinate over:
Is this a comeback story you’ll be proud of in a year?
Or is this another round of stagnation, loss, and embarrassment?
—
Action Step: If you want an extra dose of accountability, shoot me an email (td@structuredtrader.com), and tell me:
- Why it’s going to be different this time.
- That you’ll commit to stepping up as a trader.
(I’ll reply with extra steps to take)
—
Step 1: Stop Trading
Remember my analogy about an athlete being benched?
I can guarantee you there are people who will read through this entire little course in one sitting, go “Yeah, I know all this stuff” and return to trade tomorrow morning.
I can also guarantee they’ll repeat the same crap and flame out (again and again and again).
That’s because this process is not about acquiring MORE knowledge.
Instead, it’s about identifying and isolating the issues that are repeatedly killing your performance.
This isn’t about your strengths or even your minor weaknesses. It’s about addressing the handful of red flags in your trading.
Your strengths and weaknesses are areas for lifelong optimization and experimentation. But this is an SOS course that’s meant to stop the bleeding.
It’s an introspective process and the aim is to come back to the game with a SIMPLER approach to trading.
Less, not more.
All I’d like you to do for today is email your broker and ask for a temporary suspension on your account.
Here’s a script you can copy + paste into an email to your broker:
Hi,
I’m planning on taking a short break from trading and I’d like to temporarily pause live trading for my account (acct number 12345678).
I’d like to still use my demo trading account, though, and I’ll send another email when I’m ready to return to live trading (probably in 4-6 weeks).
Please let me know when that’s taken care of, and if there are any extras you need from me.
Thanks!
Action Step: Send the email to your broker and pause your account. That’s it. You can take the rest of the day off 🙂
Step 2: Your Minimum Viable Strategy
Underperforming traders are notorious for overcomplicating things and doing too much.
Struggling? Add more indicators!
Problems? Get another screen!
Losing? Take another course!
Every first-year trader on Reddit or ForexFactory or any of the big forums almost always has too much going on.
So instead of a big, detailed strategy – write out your approach in its simplest possible form.
Include the instrument you trade, your edge, your timeframe and how you execute. For example:
“I trade 5m opening range breakouts on the NQ”“I trade daily pullbacks on the 6E”“I trade breakout fails on CL”“I fade the premarket high or low if it’s hit in the first 30 minutes of the RTH session”
Literally write this out on a notepad or use the blank section on the next page.
Do it, because we’re going to come back to it later.
What’s your trading strategy? (in one sentence) ______________________________________________________ ______________________________________________________ ______________________________________________________ ______________________________________________________
Action Step: Write out your one liner above.(Bonus point): Take a picture of your one liner and send it to me. I’ll send you something good in return!
Step 3: Hard Analysis
Now for some fun.Or, possibly, something really uncomfortable. :/
I’d like you to look up and write down your performance numbers for the last 3 months:
Your P/LThe number of trades you tookYour Win %Your Win % for longs and shortsThe time you spent in a tradeThe average risk per trade (if you trade without stops, use a big Z here)The size of your average winThe size of your average loss(for daytraders)
The size of your average winning day The size of your average losing day Total number of trading daysHow many winning days have you had How many losing days have you had Your biggest losing day
Your biggest winning day Your expectancy
(avg W x W%) – (avg L x L%) = expectancy
All this data is available from your broker. If you’re keeping a good journal, it’ll be in there too.
But….even though it’s available, plenty of struggling traders never really look at their numbers (especially when they know they won’t like what they’ll see).
Avoidance is easy, but it’ll just lead to the same bad results.
So, again, use this chance to take on all the uncomfortable crap head-on.
I promise, writing out your numbers will give you a sense of relief, even if they’re awful, embarrassing, infuriating, whatever!
This is a vital step. You’ve got to know what your baseline is if you really want to make improvements.
If you can’t measure it — you’ll never change it. Think about it like someone trying to lose weight.
One of the first big changes they have to make is to start tracking their inputs (food, quantity, etc) and outcomes (regular weigh-ins).
The same thing goes for traders trying to make core changes. So, here’s what to do next: —> Fill out the numbers template.
Action Step:Fill out the numbers template (here’s a link to the Google Sheet version). You’ll get to blank template that’s View Only.Just hit “File -> Make a Copy” to get a copy you can fill out.
Bonus Points:Send me a screenshot. I’ll reply with a breakdown.
Step 4: Soft Analysis
This section is also potentially uncomfortable, especially if you’re not already journaling actively.
But, like the previous steps, it’s absolutely vital. Here’s what to do:
Open up a Google Doc or take out a notebook and block off a half-hour for distraction-free writing.
Silence your phone, turn off your computer’s WiFi, and lock yourself in.
Here’s the simple question I’d like you to write about:
What do you think is going on? Why is your trading going poorly?
Simple, right?
The overwhelming majority of traders I’ve dealt with can identify the basics….but they rarely understand:
Why it’s happening What to do about it.
The solution to both of those things starts with a deeper exploration of what’s happening in your head.
Are you dealing with external stress? What’s happening?
Why?
Have you been jumping around with risk or new strategies?
Why?
Are your habits changing? Why?
The more you write, the better.
Be honest with yourself and just….write. Don’t stop until you really have nothing else to put into words.
Action Step:Do the journaling exercise as described.
You don’t have to send me a copy, but I’d still encourage you to send me an email letting me know it’s done. (dan@structuredtrader.com).
Include SOS in the subject line and I’ll respond with another bonus point step.
Step 5: Self Assessment Quiz
Now that you’ve taken a proper look at your performance stats and had a deeper-than-usual look at yourself…
It’s time to assign some grades to specific areas of your trading.
Like the previous steps, this is all about establishing a current baseline and creating a performance evaluation system you can use consistently in the future.
Here are the 6 areas to score:.
1.The clarity of your strategy2.The quality of your journal3.The quality of your executions4.The quality of your risk control5.The consistency of your performance 6.Your non-trading life
For each section, you’re going to score yourself a 0-5
I’ve included examples for each level – use them as a rough guide and attach your own one-line summary for each score.
Roughly speaking, your scores should fall into these categories:
4-5 = good stuff, you feel solid.2-3 = minor weaknesses, but nothing crazy.0-1 = the big scary problems that feel out of your control.
Here’s a link to the Self Assessment Quiz:
(it’s a view-only Google Doc – you can either print it and fill it out by hand, or you can get your own fill-able copy by hitting File –> Make a Copy)
Action Step:
Take the quiz,Fill out the supporting questions.
(Bonus Point): Send me a copy of your quiz + answers. I’ll send you an extra step you can take.
Step 6: Identify Your Loose Screws
Now that you’ve run through some basic analysis and scored yourself, you should start to see a few themes developing.
If you were just generally looking to improve your trading, the best performance psychologists would suggest focusing all your energy on improving your strengths.
But, because this is an SOS course, I’m assuming you’re really struggling – possibly to the point that you’re failing or at least consistently doing real damage to your account (and your head).
Because of that, focusing on your strengths isn’t enough.
Instead, you’ve got to reset – and take care of the red flags that are threatening your business.
It’s a little bit like that scene from Cool Runnings, where the Jamaican bobsled team is making its final run in the Winter Olympics.
They’ve got an old, junky bobsled that they’ve revamped and prettied-up with a new paint job.
They’ve done a ton of work, made big improvements to their game, and even started looking as slick as the top dogs in the competition.
But, as the sled goes down the track on their final run, the camera keeps cutting to a closeup of one of the internal screws rattling.
Rattling, rattling…and slowly coming loose.
Then at the pivotal moment, they take a hard turn and….BAM! The screw pops off and the sled flips over, killing the team’s chance to finish the race and possibly win a medal.
So, just to recap the movie:
This team of no-names trained like crazy to learn a new sport.They bet on themselves and consistently improved. They bootstrapped their way to (near) the top.
Then, ONE goddamn loose screw destroys everything.
See where I’m going with this?
So, the next step is to look for your loose screws, based on the answers above in STEP 5.
4’s and 5’s are your strengths. Later, when you’re back to stability, these are the elements you can leverage and build on long term.
2’s and 3’s represent a weak spot that’s probably quickly fixable. They’re usually points that just need a little bit of tweaking or simplifying.
0’s and 1’s are loose screws. They’re the things that need to be fixed before you go back to trading live.
We’re pulling up a bunch of issues you can work on in the future. But for now, the rest of this course is going to be aimed at isolating and fixing your loose screws.
Action Step:
#1) Fill out this table (here’s another Google Doc link). You can either print it out.or make a copy and fill it out on your computer.
All we’re interested in is the areas you scored a 0 or a 1. You can skip the areas where you scored a 2-5.
#2) Write out the specific issue, in your words. This time, go a little deeper on your loose screw(s).
What’s the problem?Why is it happening?What causes it?What does it cause?How have you tried to fix it? What have you not tried?
Bonus point: Send me a copy of your answer(s).
Step 7: Tighten the Screws
Steps 5 and 6 were about identifying and focusing on the loose screws in your trading.
This step is about finding the quickest, simplest fix for each loose screw.
This is a critical step because most trading educators, coaches, and psych resources fall totally flat here.
They’re great at optimization, deep work, and marginal gains.
But when it comes to fundamental behavioral issues….. It’s usually pretty disappointing. I’ve seen advice like: Overtrading? Just stop.Discipline issues? Be more disciplined!
That’s pretty weak, to me. It’s like a nutritionist telling a client who wants to lose weight – “Eat less”!
Yeah, no shit, Sherlock. Everyone knows the “what” – but it’s the “how”, it’s the practical plan that’s needed in order to break the pattern and form a new habit.
In pretty much all cases of serious behavioral resets, the first step is to isolate yourself away from the problem. Like:
Trying to lose weight? Clean out the junk food from your pantry.Trying to quit smoking? Throw out your cigarettes.In more serious cases like addiction….go to rehab (where you can’t access the drug you’re battling)
The point is, if you want to stop a damaging behavior – you’ve got to find a way to distance yourself from it.
That’s what we’re going to do here.
A quick fix is not going to solve the cause of the behavior, but it’ll act like a circuit breaker and hold you back from repeating the action that’s killing your trading.
Quick fixes should be simple, practical, and easy to implement. Ideally, you should be able to implement your fix(es) today.
I’ve attached a Google Doc with examples of loose screws with their quick fix solutions.
Get it here
Take the loose screw(s) you lasered in on in Step 6 and attach a single action you can take to break each pattern you’ve developed.
Action Step:1. Take a look at this Google Doc.
2. Attach a quick fix for each loose screw.
Bonus #1:Email me a screenshot of your quick fix(es). I’ll reply with some feedback.
Bonus #2:Need a little extra help coming up with your fixes? I’m offering a free call to help.
If you’d like to talk it through, shoot me an email (td@structuredtrader.com) and include “Step 7” in the subject line.
Step 8: Your Comeback Strategy
By this point you should have:
Stopped tradingIdentified your strengths and weaknesses Identified your danger areas (aka the loose screws) Identified a quick fix for each loose screw
If you’ve made it this far, great!
But…you’re not done yet. A plan is a great start, but it’s not enough to guarantee adherence to a new set of rules and new habits.
In order to make that developmental leap, you’ve got to reset some basic behavior. If you’ve been making the same mistakes for a long time, this is especially important.
I suggest you take the full 2 weeks (or longer) to come up with a new, clear plan based around protecting yourself from your loose screws. Be defensive.
You can use the Minimum Viable Strategy format to create a quick summary for your new plan.
Then, don’t go live right away.
Plenty of trading advice out there trashes demo trading because it’s not “real”.
That’s true – it’s not quite the same as trading real money.
But for our purposes, it’s an important stepping stone.The aim here should be to start rolling out the new strategy
without financial pressure.If you’ve gone through all the steps, you’re probably going
to be implementing adjusted versions of your::
Entries/exitsTrade management rulesJournaling processes(+ a couple of hard new rules, like automated daily loss limits from your broker)
Even just learning to end your session with a complete journaling step can be incredibly difficult for traders who are used to just flitting from live session to live session to live session.
So, at this stage, I’d suggest spending at least a month on demo. Look at it like a chance to build confidence and improve your business.
For this step, I’ve included a link to a 20-day calendar you can either print out or save as a Google Doc.
Get the calendar here
I’d like you to spend the next 20 trading sessions on demo. If you make it through the session:
Don’t break your entry rules. Don’t break your exit rules. Don’t break your risk rules. Don’t let a loose screw happen. Journal after the session by:
Taking a screenshot of your chart Completing a brief diary entry…. Taking a screenshot of your chart Completing a brief diary entry….
then color in that day’s box.
If you fail to stick to those 4 steps, mark that day with a big X.
(Swing traders: instead of “days”, you can focus on individual trades. So, instead of 20 good days, make it 20 good trades.
The aim here is to build a streak of good, safe trading (on demo).
Instead of focusing on profit, wins + losses, and money, this exercise will help you shift your attention to your underlying process.
There’s a psychological aspect to building streaks of good behavior. People have been using this to build good habits for years, from grade school (remember getting stickers for completing your assignments?) to factories (ever seen the “___days without an accident” signs?).
The more you focus on the basic steps that make up a trading day, the more you’ll shift you attention to the process instead of the outcome.
I challenge you to use this simple little calendar as your gateway back to live trading.
If you can string 20 good sessions together, go back to your trading (with your newly adapted plan).
But if you break your streak by repeating your loose screw(s)…..you’ve got to start over.
You can take this tool into your trading in the future as well. Learning to love your streaks will help keep you focused on the right things while you trade.
Again, all you have to do each session is:
don’t break your entry rules. don’t break your exit rules. don’t break your risk rules. don’t forget to journal.
don’t allow a loose screw to pop up. That’s it.
Do it 20 times.
Action Step:Print out the Streak Calendar (see the Google Doc link on p. 31).Post it on your wall next to your computer.Fill out each session’s box and build a streak of good behavior.
Bonus: Send me a shot of your calendar. I’d like to see where you’ve posted it and the streak you’re building!