RJ: the asker of great questions, asked:
Do you have anything written on a weekend review process for a trading journal and trade chart markups?
Double loop learning requires review of work but I don’t have a well-defined process for weekend reviews.
I searched the chatroom and your essays but either didn’t use the right search terms or just didn’t find anything written.
Could you recommend some reading or anything else so I can develop an effective weekend process?
I replied: Try this on: this is what i find myself doing, over and over until someday I get it right:
0. Center ourselves on who we are and feel gratitude for the gift of life and consciousness to reflect on the wonder that is our Self and the world around us
1. Accept who we are and our desire to improve
2. Review what we aim to know, to do, to be (review goals and objectives)
3. Review the facts about what was done, including detailed performance stats as part of our ongoing study
4. Observe the slope of the trendlines and the volatility of our performance (all our trades and all our actions and all our feelings)
5. Review the forms and checklists to ensure discipline was performed; what did we overlook, where did we take shortcuts, and why?
6. Look for moments arising from the facts that seem to be important, trusting in our intuitions to nominate reflections
7. Follow the trails of reflection, connected to facts
8. Identify the A HA! moments
9. Conduct the 4 part learning journal exercise (A Ha moment, Reflection, Commitment to action, Results)
10. Commit our spirit and self to the next cycle of the wheel of improvement which continues to turn
this is what happens when i start writing after reading from the book of tales of Sun Wukong (The Monkey King)
We know from scholarly and popular literature that 90% of new businesses fail in the first five years as an additional 90% fill in the next five years and yet there are groups of organizations that are remarkably successful while operating the most difficult of circumstances when you would expect failure to be the norm. These organizations which thrive in high risk, high uncertainty environments in which failure is catastrophic are collectively known as high reliability organizations (HRO). Scholars have taken a number of different approaches to the subject of HR role in the literature. They have approached it from the disciplines as diverse as: neuropsychology, civil engineering, organizational psychology, sociology, naval aviation and nuclear propulsion.
My own research on decision-making under conditions of uncertainty led me to the scholarly literature on high reliability organizations(HRO) through the approach of social psychology where the two most influential writers are Weick and Sutcliffe from the University of Michigan. They had identified five qualities of HR role that lead to exceptional outperformance and the development of organizational resiliency. Resiliency is an important topic for traders because it describes strategies and resources that help the trader endure through emotionally challenging and training times. Because traders operate under high stress and uncertain conditions all the time, it occurred to me that perhaps the principles of HRO might have some pay off for traders. I was happy to find the important connections that can be of benefit to traders in developing robust trading plans and emotional resilience.
Weick and Sutcliffe identify five qualities of HRO’s which distinguish them from traditional organizations which traders might seek to develop in their own trading plans:
1) Preoccupation with failure: To avoid failure we must look for it and be sensitive to early signs of failure; not to lay blame but to ensure the plan does not further unravel
2) Reluctance to simplify: Labels and clichés can stop one from looking further into the events; consider the evidence for your beliefs carefully and don’t oversimplify.
3) Sensitivity to operations: Systems by nature are dynamic and nonlinear; it can be hard to know how the different pieces fit together and how quickly things may change.
4) Commitment to resilience: you must be able to perform during periods of high stress. This means you have to be able to absorb strain,, recover from difficult situations, and then learn and grow from previous episodes.
5) Deference to expertise: This means respecting the evidence of the results and having confidence in the quality of your justified conclusions. These are more important than platitudes and conventional wisdom.
Firefighters are an example of an HRO in practice that traders can learn a lot from. The National Wildfire Coordinating Group (NWCG) has developed a set of 10 Standard Fire Orders, which are a logically organized set of rules that have been keeping firefighters alive and successful in their mission since 1957. They are to be implemented systematically and applied to all fire situations. They also have identified 18 watch out situations that represent known conditions of especially high risk. These apply equally well to traders as I tried to show below.
Professional Trader Behavior (adapted from the NWCG: http://www.nifc.gov/safety/safety_10ord_18sit.html)
1. Keep informed on market conditions and forecasts.
2. Know what your market and target are doing at all times.
3. Base all actions on current and expected behavior of the market and target.
4. Identify escape routes and safety zones and make them known.
5. Post lookouts when there is possible danger.
6. Be alert. Keep calm. Think clearly. Act decisively.
7. Maintain prompt communications with your brokers, partners in the market.
8. Give clear instructions and insure they are understood.
9. Maintain control of your trades, orders and decisions at all times.
If 1-9 are considered, then…
10. Trade the market aggressively, having provided for safety first.
The 10 Standard Orders are firm. We don’t break them; we don’t bend them. All traders have the right to a safe environment is.
The 18 Watch Out Situations
1. The market and your target not scouted and sized up.
2. You haven’t planned for or rehearsed this situation.
3. Safety zones and escape routes (protective stops) not identified.
4. Unfamiliar with market and sector factors influencing price behavior
5. Uninformed on strategy, tactics, and hazards.
6. Instructions and assignments not clear.
7. No communication link between traders, brokers and partners
8. Entering trades without predetermined exit points
9. Trading without stops.
10. Chasing a runaway breakout
11. Not being aware of critical states
12. Unaware of broader market condition.
13. Unaware of potential market turning points
14. Price range begins to expand in short term time frame.
15. Change in broad market volatility.
16. Ignoring signals of changing market conditions.
17. Difficult to judge where to play safety stop.
18. Feelings of physical, mental or emotional fatigue.
Note that these are just my own quick interpretations; yours might vary. The exercise in translating from firefighter perspective to that of a trader is definitely worth doing on your own as well. Give it a try!
It’s sad to see my home town descend into such disgrace. It wouldn’t be this bad if Republicans were in charge and were really as evil as Democrats are incompetent. Unemployed and not looking 47% 35% on foodstamps; 1000s of homes abandoned’. Population cut in half in 20 yrs
“Leaders” crying out for more dole
Meanwhile Democrat poster boy Warren Buffett is engaging in the completely legal tax avoidance behavior that is getting Google pilloried fpr prudent fisuciarily responble decisions about what to do with their money.
dare people act in such a way as to deny government every possible dollar? the nerve!
The market continues to hem and haw leading up to the election. Following that the sequestration decision has enormous implications for next directions in the US mkt. There’s a 1.5T potential swing based on who wins and how sequestration pans out.
In the worst case (in my view) Romney wins, and tries to spend an addition 1T on defense over the next 10 years, AND sequestration is lifted preventing an additional 500B from being auto-cut from defense. That would be 1.5 large down the drain, and would perpetuate the aggressive overseas interventionist policies of the last decade. Meanwhile we cant get funding for high school sports teams and free community college and skills training
Spoken by a guy who has never started or run a business in his life. When you compare the level of input by a small business owner to what “help” is provided by others. What a pandering fool.
There are a lot of wealthy, successful Americans who agree with me — because they want to give something back. They know they didn’t — look, if you’ve been successful, you didn’t get there on your own. You didn’t get there on your own. I’m always struck by people who think, well, it must be because I was just so smart. There are a lot of smart people out there. It must be because I worked harder than everybody else. Let me tell you something — there are a whole bunch of hardworking people out there. (Applause.)
If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you’ve got a business — you didn’t build that. Somebody else made that happen. The Internet didn’t get invented on its own. Government research created the Internet so that all the companies could make money off the Internet.
The point is, is that when we succeed, we succeed because of our individual initiative, but also because we do things together. There are some things, just like fighting fires, we don’t do on our own. I mean, imagine if everybody had their own fire service. That would be a hard way to organize fighting fires.
Upholding Obamacare means young people now get to learn what its like to pay for everyone else’s healthcare and not just their Social Security now. Maybe this is why we don’t teach them math skills, so that they dont understand what we are doing to them