Coaching Session with Pat Bailouni

Hi guys, coming with a rather special blog post here, well quite similar to the one I did about my coaching session with Jared Tendler.

I was fortunate to spend an hour in a session with Pat Bailouni this Friday. Why was that special? Well, he’s a Demartini Facilitator that focuses on coaching traders / poker players (and others) how to overcome any mindset challenge they are currently faced with (as well as helping individuals to build their strategic plan.

As I keep saying here, whichever strategy you trade will be profitable if it has an edge, whichever strategy you trade doesn’t impact your trading results, rather it’s all about the application of your edge. If you screw with the process and don’t stick to your edge you’re not going to be profitable.

That’s where the mental game comes in.

That’s why I think getting coaching sessions with people that have experience in the mental game. It’s the one frontier where I can work on, but working with other people will make it a hell of a lot better.

I know I can improve my mental game. I also know, you can improve your mental game, whoever you are.

Anyway, now that we’ve talked about why I think it’s important I’ll dive into what we talked about in our conversation, if you’re interested in hearing more about what he does, feel free to reach out to him:

https://patbailouni.com/coaching

One of the challenges I am faced with is:

I know I am a competent trader, I’ve spent over five years studying the markets, the last two being full-time.

I know my trading has a positive edge.

However, I want that edge to show itself now, I want the opportunity to take trades.

That being said I don’t rush into trades, I stick to my trading plan, I’m really strict with that so it’s not a problem in itself. It still creates a willingness tho and some unease of not being in a trade.

It may be the idea of needing a salary, since I live on my returns, I need to make money every month, so when I’m not in a trade… It’s not ideal!

It creates the idea that winning trades are good and losing trades are bad.

Which is something, I’m guessing, a lot of people struggle with

Having a positive charge reaction to one isn’t bad in itself, it’s bad because that means the other one will have a negative charge.

As long as we look forward to winners, as soon as we fantasies about winning trades we’ll start dreading losses!

Every event is neutral – until we decide it isn’t.

If, in our perception, it challenges our priorities we will label it bad
If, in our perception, it supports our priorities we will label it good

It’s that simple.

Now I’m not going to say some events aren’t preferable, just not good. It brings back to a debate Greek philosophers had several millenniums ago.

To keep this article about trading rather than philosophy I’ll leave it at that 😀 otherwise we’ll probably go for hours!

What we need to remember is that:

Winning isn’t good – Losing isn’t bad.

If we are able to look at our wins as something that isn’t good or bad and our losses as something that isn’t bad or good then we’ll reach equilibrium.

The reason we want to change our mindset from winning is good and losing is bad to both are neither good nor bad is to ensure we stick to our plan.

If we thinking winning is good we will seek after winners and have FOMO (fear of missing out on the win) – this can pull us away from executing on our plan.

If we think losing is bad we will try and avoid losses – which is impossible in the markets. Again, taking us away from objectively executing on our plan.

The only way to truly execute on our edge (our plan) is to see winning & losing as neutral (i.e. not worry about the result) and just focus on executing on the process.

But if you see profitable trades as good and trades that result as a loss as bad you won’t go far. You need to look at trades that fit your plan as good, trades that don’t fit your plan as bad.

Winning or losing trades that fit your plan shouldn’t bother you. You should be neutral about the outcome, happy that you took a trade that fits your plan tho

Turning winning trades and losing trades into neutral trades

Now I wouldn’t be writing a blog post just for that without giving any tips – I’m a mean bugger but come on 🙂

This exercise I’m going to talk about can only happen when you know what is important for you, would it be money, time with family, tranquility, autonomy etc etc

Now when was your last loss that stung?

Once you know which pair / which trade it was try to go back to the moment of that loss

How in that moment & from that moment until now was it a benefit and service to you?

What did that loss bring to you that was positive?

For me the last loss brought me quite a few positive things.

1- It made me want to backtest a lot more

2- It made me stop thinking about it every hour of the day asking myself when it was going to reach my stop loss

3- I was able to do my ASR quite early in the week instead of waiting

4- I was happy I stuck to my trading plan and risk management, had I not, I would’ve lost a lot more

5- It made me consider a potential tweak to my trading – which I’ll of course have to backtest before implementing it

Now let’s try to find drawbacks to trades that reach profit target.

Try to get back in the moment of that winning trade, I’m going to share a few things it lead me to do that were drawbacks

1- It made me feel confident, proud of my ability, I felt as if I knew what the markets were doing

2- It made me wonder if I should start increasing my risk per trade

3- It reached profit target however went running for more so I still felt a “I could’ve banked more”

4- I started thinking about the money I just made rather than thinking in terms of probabilities, it made my following loss a lot more hurtful than it would’ve been otherwise

5- It made me want to take more trades since I just proved I could take winning trades

The aim here is to balance the trades that reach your profit target and those who don’t. They all have drawbacks and benefits

The aim is to make them feel neutral

It’s only when whatever happens isn’t positively or negatively charged that you’ll feel comfortable

Well, I think, I’m not there yet :0

I hope all of this was useful!

Feel free to check out Pat’s website and get in contact with him

He’ll definitely do a better job explaining this than me

patbailouni.com/coaching

November 15, 2020November 15, 2020

My Advanced Self Review

In this post I’ll try to answer a few questions: Why do I do my ASR (advance self review) weekly? What do I look for? How do I come up with ideas to check?

First of all, let’s remember, I don’t know what’s going to happen after I take a trade. All I know is that I can always improve.

I don’t know where the price will go after my entries

There’s an edge to our entry, we know that the probability of it going in our favor is X%

There’s one common thing that unites every successful trader I know. We all admit we do not know where the market is going to go after we take a position.

To take an example:

If I take a 4 hour script entry that fits my rules. I can tell you that in 50% of the time it will be a 3% win. The probability of it turning into a break even trade is of 8%. The probability of a loss 42%.

But that’s all I know. Well…

I can also tell you that in 22% of the time, the next two candles will go against my position. in 42% of the time the next two candles will chop around, one will be bullish and the other one bearish. In 36% of the time the two candles will go in my favor.

I can keep going more and more in detail, about every single entry type I have. The average return you can expect from those

However, I still can’t tell you where the price is going.

It’s just a question of probability and risk management.

However, I believe I can still improve my trading. Add new rules or filters. Discover new ways of taking a position. Rules I can remove etc.

That’s where the ASR comes into play.

ASR stands for “Advance Self Review”

You want to learn from what you experience in the market.

Let’s dig into how I do my Advanced Self Review

The first thing I do is go back through the week and look for all positions I could’ve taken, I look for trades I may have missed, trades I took and how the market moved.

At this point I don’t look at my trading journal, I look at the chart as if I was backtesting. I keep track of every single set-up that happened and their results.

I look for reasons why the market made a high there, is there something that could explain it? Is there a way for me to forecast it in the future? Does it bring up similar thoughts I’ve already had while doing my advanced self review?

Listing all the potential trades

Once I have tracked every single trade set-up that fits my rules I look at my execution.

How many trades did I execute that I was supposed to execute? How would I grade myself?

In my 4 hour trading, what I share here, I executed on 4 trades, two on NZD/USD and two on GBP/NZD.

After reviewing the week I can say with confidence that those 4 entries were all valid.

Well there was CAD/JPY, it was a pretty trade set-up – however it didn’t fit all my rules, so I did good to stay out. It wasn’t a script entry, that’s the rule it broken, it didn’t close low enough
There was also GBP/CHF, that one was pretty too, however, it didn’t fit my rules, it wasn’t a script entry. So I stayed out. Why wasn’t it a script entry? Because there was one bearish candle before the candle I’d have entered.
NZD/JPY was another one. Once again it wasn’t a script entry, the price action had been going sideways for 20 hours. It was nearly a script entry. Just the question of the close 3 candles ago. The fact it was so flat cancelled the script signal.
USOIL is another one. Well, I didn’t like the entry candle anyway so I’m happy I didn’t execute and it wasn’t a script entry either
CAD/CHF wasn’t a script entry (I’d have been interested the 10th of Nov. at 11am French time) because it didn’t close low enough. However it was also outside of the area of supply so all in all I’m not sad I didn’t take it.
EUR/CHF provided a script entry. However for me the price action was too slanted and it had spent too much time within the area of supply – so didn’t take it
EUR/GBP didn’t provide a script entry either. A question of the close a few candles ago. So good I didn’t execute

EUR/NZD provided a script entry, however it was below the weekly stack so I didn’t take it. That’s interesting data point, those are rare, so I’m highlighting it for future references. I want to collect more data on those trades. It fits my plan everywhere except for that.

USD/JPY also provided an entry. After a clear double / triple top – I’d have been happy to take it, however to have a weekly stack I’d have needed to use two weekly candles rather than just one. Which is my rule. However, I’ve seen those trade set-ups play out quite a few times. So I’m highlighting this trade to compare it to previous trades that did the exact same. I want to see if the average return is positive

How well did I execute my trading plan? Is there anything I should look into?

Okay now that I’ve mentioned every trade that I could see that worked with my daily zones was there any trades that I should’ve executed?

The answer is no, I executed the 4 trades that presented themselves to me and that fit every single criteria of my trading plan.

However, there were two trades that I didn’t execute because I wasn’t the biggest fan of their weekly stacks.

Now I know I want to go back and check previous occasions where the weekly stack required two candles instead of one AND if it’s okay to take trade entries that are just outside the weekly zone?

Time to look back in my data set

Not going to share the results about that analysis to keep my trading plan more or less “private”even tho I’m sure you can reverse engineer it if you spend enough time here.

Sorry 🙂

Now once that is done I try to understand why the market offered so many potential entries? The reason – price had finally been pushed to areas of supply / demand since institutions removed their hedges to cover their asses during the US election.

That was my ASR for the 4 hour strategy. I’ve been using it a lot longer than my script so it’s normal I take less lessons out from it than my script trading.

A shorter version of my ASR for my scalping

Let’s quickly look into my scalping, I promise it’ll be quicker since I won’t go into as much detail. I want to mention it because I discovered something important while doing it.

The fact that last week was the worse week in terms of result of my scalping strategy over the last few months definitely made it interesting.

While doing my ASR, I noticed there had been 21 valid set-ups.

I took 15 of those set-ups.

However that’s because one day there were 8 trades, where I limited myself to 5, I wasn’t feeling too good after 5 trades that resulted in 1 BE and 4 losses. So that’s 3 trades I had identified and could’ve executed. I took Friday off too, there was only one trade that showed up, a BE. So that makes up 4 trades.

So I’d have executed 19 out of 21 valid set-ups.

That’s already pretty good, I’m quite happy about that. Sure I missed two trades.

Focus on your execution of your trading plan, not your results.

Executing a profitable trading plan will pay out in the long run. That’s all you need to do to become a profitable trader.

For a third week of living trading this plan I’m quite happy with that. In university you get an A for an 85% – I’d have scored a 90% here.

Is there any lesson here?

From there I need to understand why this week was so poor compared to previous weeks.

In my previous trading I was able to identify that the market could either be trending or correcting. I figured my scalping – which mainly focuses on short moves works better in a correcting market.

First I discussed it with a trader, a good one, that trades a very similar strategy.

We agreed that we want to avoid trading the market in such condition. Or at least, trade differently.

That made us realize that it was the market type that “caught us”.

If you’re dressed for a summer day in winter you’re going to suffer if you live in Canada. You have to adapt to the conditions. You can’t tweak the external conditions to fit you.

You have to adapt to the condition of the market

Anyway. I then looked and did some research on my side of things into market regimes.

I came across this video: https://www.youtube.com/watch?v=VMqXstX4ALs

I thought it was rather interesting.

So I kept digging into it.

Here’s my scalping returns:

I then added his market regime indicator to my chart, I edited it slightly and changed the time frame.

I then went through every single trade taken in my data set for the last three weeks and figured out what market regime they’d be in:

I don’t know about you but I find that quite interesting, the average return of my strategy in “Neutral” market is over three times higher than in other market conditions.

I kept digging into this. However it’s important to mention two things.

1- To make a change in your trading plan I recommend having a lot of data. Ideally I’d have 100 neutra trades, 100 quiet trades, 100 volatile trades. That would be better,

2- Make sure you are not curve fitting your data. I could correlate my trading returns with the amount of rain a specific region gets if I look deeply enough. You need to be careful with this.

Anyway.

I kept digging and searched for a way to improve the results while having a higher amount of data, so I split those three categories into two.

And the results looked even better.

I hope that helps.

I’m not saying you have to look into the market condition, it could be interesting for you, sure, but that’s not the point of this post.

You have to reflect on why your trading plan stopped you form executing winning trades and what you could add to your trading plan that would enable you to remain “safe” from conditions that do not fit your trading style.

Once you have collected enough data you’ll be able to tweak your trading plan to increase even more your profitability.

On that note, have a fantastic week!

October 7, 2020October 7, 2020

My sessions with Jared Tendler – a Mental Game Coach

I’m going to start flat out saying I believe I highly benefited from our 3 sessions together – but it’s only been a month since our first call, so will probably need to wait longer to see the real results.

On a second note, I did not pay for these sessions, instead I was lucky enough to be one of the traders (that filled in his survey & questionnaire) selected to get these for free, so that’s even better for me.

Now that we got the important stuff and the disclaimer done let’s dive into it.

Who is Jared Tendler?

Jared Tendler is a poker player coach, he’s actually choached over 500 poker players, including some pretty serious names if you’re into poker ( WSOP bracelet winners Justin Oliver, Kristen Bricknell, and Jordan Morgan)

I didn’t know him from his coaching services to poker Players, instead I actually started by reading his two books The Mental Game of Poker 1 & 2 (this is an affiliate link) which I highly recommend to traders.

In case you’re wondering, why should traders read books about poker – it’s because we both deal in probabilities where losing is constant.

These two books were recommended to me by a hedge fund manager, and I’m glad he did since those two books are probably the most useful books I’ve read in terms of trading – yes I rate them by far above the Chimp Paradox that so many people keep talking about.

All in all, I think he’s a great guy with interesting insights, and that’s why I follow him on twitter and his blog, where I noticed he was searching for traders to answer a questionnaire / survey for his next book, about the mental game of trading. Which I filled up and sent back because I know I’ll be getting his next book with no hesitation.

Turns out, it may have been a life changing experience 🙂

What did you work on?

Based on the answers I sent in the questionnaire, Jared (correctly) identified two key aspects that could be worked on in order to improve my trading.

To be fair, it wasn’t extremely specific, those two aspects were Fear and Greed – I think those two things are something we all struggle with time to time?

So here’s where I would recommend you to read the chapter (4?) on Strategy from his first book – The Mental Game of Poker 1 (yes once again an affiliate link)

In his view – as a successful mental coach, he also has a master degree so it’s not just voodoo shit, there’s two primary strategies that are needed to solve mental game problems:

Injecting Logic (a short term strategy)

Resolution (the long term strategy to correct the faulty logic)

Injecting logic is basically talking yourself through whatever you are experiencing, however, that can be quite often look like throwing some gasoline on a fire – not really helpful, let’s be honest really not fucking useful, I’ve found myself saying many times:

“WTF the market is against me! It’s not possible this trade was supposed to be a winner!!”

Rather useful no? Instead… I probably should be saying something like this:

“It’s just variance, I made the right play. Stay calm, and just keep playing”

(I rarely used to say that before reading his books)

Would be way more useful, I think we can agree, however that doesn’t fix the problem, it helps, but doesn’t fix it.

The only way to fix a mental problem is by remaining in control of your emotions, being able to identify the emotion arising before it’s a gigantic fire no one can control.

A bit like that.

Injecting logic is the muscle you bring to the fight to delay, to reduce or even block the emotion before it reaches its peak intensity. It’s a crutch, you still need to work towards the resolution of the problem.

So here’s the two fold aim of injecting logic:

1- You catch the emotion such as fear or greed before it reaches my emotional threshold (where I basically throw my trading plan out of the window, with my laptop, and swear I’ll never open tradingview again and then break down crying)

2- The logic corrects the underlying flaw

So how do you inject logic?

Now that we understand what logic is… Let’s dig a bit deeper and explain how we inject it, and give a few examples of the logic I inject when I start to feel fear or greed.

1- Recognize the emotion

2- Deep breath

3- Inject the logic

4- Strategic reminder

5- Repeat as Necessary

6- Quit

He goes in way more detail about all these steps,

I’m not going to spoil the book, it’s really good, so go read it, it will be a worthwhile investment, if it isn’t bill it to me.

~~(I may pay, or not, probably not because you’d be lying)~~

The aim is to create a map of your mental game

Basically you want to describe what’s happening in your mind – easy right?

Here’s a globe. Because that’s easier to make than mapping your mind sadly.

I’m not going to share mine, I’m sorry that’s a bit over the top? Is it? I’m not sure, but maybe, so I’d prefer not to do so – if you think it may help you and you’ve read his books hit me up and I’ll share it no problems

If you’ve got his book, the first one, go and check out appendix II, it includes a questionnaire that will help you analyze your mental game.

The aim here is to write out, in as much detail as you can the thoughts and your behavior when you start feeling greed or fear.

That being said, fear and greed don’t always show up at the same time or same level, sometimes my greed is looking at the monetary value I’m up in the trade,

Other times I feel the urge to close a trade early, it’s close to my profit target after all – AND I CAN’T WAIT – I CAN’T RISK THAT MONEY OKAY! GIVE IT TO ME RIGHT NOW.

That’s basically my greed level one and greed level ten there.

Try to map out every single level of greed/fear/whatever you want to work on – from the smallest emotion to the well all caps version where you go crazy.

Once that was done we studied it, he asked me to review it extremely often in order to be able to identify these signs as they occur, that way I know when to inject logic.

An example of injecting logic

Injecting logic as we previously mentioned is basically a crutch, it will help us eliminate the current issue, as long as it’s not too powerful, and help us towards resolution, but… It won’t solve the core problem by itself.

The goal of this is to come up with a sentence/ a statement you can read aloud that helps to keep your head on straight before you lose it.

So here’s one of mine, for when I struggle to follow my trading plan, would it be me wanting to manage a position differently than in my plan, or taking a trade that doesn’t fit it:

Max, you’ve spent the last three months working on this trading plan, that represents around ONE THOUSAND HOURS, are you really going to throw it out of the window for this one trade?

You got a mental map now? You’re ready to move on?

Once I had developed a mental map representing a few levels of fear and greed I experience we were able to identify the core issue at hand:

I judged my skill as a trader based on short term results
I’m sure I’m not the only one that falls victim to that one!

And that’s not great if everything you do relies on variance, is it now?!

Yep, even a smart, dashing young man can fall victim to his ego and believe short term results are key

Short term results create emotional chaos, they bias my perspective about what is right and wrong, about my trading plan, they make me irritable or overconfident, they create doubt and don’t create any new strong foundations. I should not focus on short term results to build my belief in my competency

Yet they’re still useful to indicate if something is wrong if the market is behaving strangely and if I should cut my risk because I’m off my game and need to do some serious ASR.

That being said, knowing the issue is based on the fact that I judge my skill as a trader on short term results, I now know that I had to judge my skill as a trader on a different object.

In order to change that, Jared pushed me to write out everything I was unconsciously competent at when it comes to trading (he joked about knowing what a bid and a ask was is part of it – so every little thing that comes to mind may be part of your UC)

Once I got a good list written down, hell I’ll actually share it:

– I am able to identify the market structure, where key trendlines are as well as support and resistance levels without having to think

– I know exactly what I want to see in the price action before taking a trade, there is no more hesitation

– I am capable of identifying key imbalance levels that lead to strong supply and demand zones

– I am able to identify which pairs are of interest for me every single day while doing my watchlist

– I have assimilated my trading plan to my unconscious, I know exactly what I am allowed or not to do

– I do not need to think before taking a position with the correct risk sizing, that protects my maximum downside while enabling me to have a clear upside,

– I am able to correctly place my stop loss and profit target without having to reflect and debate, it’s obvious to me.

– I am able to identify where other traders will have set their profit targets as well as their stop loss and can therefore avoid being caught with them

– I understand probabilities

– I can look at a blank chart and have a bias or at least an understanding of key levels within 5 seconds

I now know that I have quite a certain amount of skill built up in my unconscious competence, I should try to reinforce my skill as a trader by really accepting it.

So every morning, I inject logic into my brain, I stopped coffee but I now rely on that logic, I basically say to myself:

I am a competent trader because I have built up an extremely solid foundation of unconscious competence by spending thousands of hours testing and analysing the charts over the years I’ve been involved with the market.

I can do all these cool things without having to think about it (the list above)

I’ll create long term success based on my competency and skill, that’s the only thing that matters, the better I get at trading, the better results I’ll get in the long run.

I’ve been doing it for quite a while now, and I have to say it’s been great, I really mean that, I now already start to feel more relaxed when taking a position and while holding one.

That being said, as mentioned at the beginning of this blog post, it’s only been a month since our first call, so probably only two/ three weeks since I started doing it. Time will tell if it’s as good as I think it is.

I’m actually going to cut this blog post short.

His books are great, these sessions were helpful to me, and I think they would be helpful to you too.

Have a great one!

Once again, links to his books – (they’re amazon affiliate links)