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!

Having your own trading plan, is (probably) the most important part to become a successful trader, would that be stocks, FX, commodities or whatever you want to trade.

Why is a trading plan so important?

It gives you the opportunity to write down exactly what you can do and how you should do it.

It’s like a cooking book, the only way to really improve a receipe is to know what ingredients to use, the amounts and how long you should cook it for.

I’m awful at cooking (Really bad, my old roommates refused to eat anything I cooked)

I know how to make salads tho, that’s the only thing I’m decent at!

Why do you think I spend so much time in cheap countries where I can eat out three times a day?? (Maybe it’s because I don’t need to cook)

Anyway, back to the subject at hand…

Becoming a good cook is relatively easy, you just follow instructions, it’s the “chef” that makes up the dish and writes down how to do it properly.

You can work in a great restaurant and make a lot of money if you’re a really good cook, especially if you work well with a famous chef.

Trading, is rather similar to working in a restaurant (not talking about the insane hours, but sometimes…)

The only way to become a chef (a really really good trader) is to become a cook (someone that can implement a trading plan), it will take time, but the more practice you get as a cook the easier it will be for you to become a chef.

Ask for help building your first trading plan

You become a good cook by learning from others how to cook, would it be your parents, siblings, a cooking book, youtube videos, an online course, a bootcamp etc etc

It’s the same with trading.

Learn from someone else

Find yourself a mentor, whoever that is (not me) and ask them if they can explain to you their trading style and share trades they took.

Once you know how they look at the market, the trades they took you can break it down.

Bring a bottle of coke to a lab and they can reverse engineer it.

You could know the exact ingredients Coca Cola use for their famous drink.

Do the same with a trading plan.

Create your first trading plan based on someone else, even better, if you can copy it. My mentor shared his to all his students, that’s what I used at first.

I knew:

The entry types
What he wants to see in order to take a position
How he manages trades
How he records them
His risk profile

That’s all I needed, I more or less copy pasted it at first.

Once you have a trading plan, backtest it

Now it’s time for you to work, you can’t let someone else do all the work for you…

You know what set-ups your mentor looks for so go and backtest.

Try them out, figure out their results and ask yourself

Do they have a good strike rate?
What is their average return?
Do I like trading them?

Based on those questions and the answers you have for them you can quite easily make your mind up, should you keep those set-ups in your trading plan? It’s up to you.

Those are my results with a backtesting exercise I did earlier this year.

I was able to figure out which trade set-ups I prefer and how I wanted to manage them.

It also gave me a lot more confidence in my trading, I saw what was possible, and it became way easier for me to execute on my trading plan.

Once you’ve backtested your plan you can then decide what to edit, what to change, what to ignore, what you want to focus on etc…

Make it your own.

Make sure it becomes your own, don’t copy the exact same trades if they don’t fit you, adjust the trading plan to your own personality – and backtest it once again – it’s all about refinement,

To go back to the cooking comparison, a chef will try out so many variations of the same dish just to make sure he has the perfect mix of flavors, smells and texture.

It’s the same with trading, just keep trying it out.

Tweak it until it becomes your own, your precious, your trading plan.

Now, you can easily argue that you don’t need to write it down, it’s in your mind, or you can easily draw it.

But…

The best way to learn is to teach someone else.

But you don’t need to teach someone else, you just need to be able to explain it on a word document.

Take screenshots of your favorite set-ups

Write down what you want to see before being able to take a position

Explain how you are going to manage your position once in the trade

What are your rules in term of taking a second trade once you got tagged out of a position, are you allowed to re-enter? Once? Twice? Three times?… Create rules and put it in your trading plan.

If you want a video about creating a trading plan, check-out this interview on Chat with Traders, I’ll admit, I have only watched it once, but Chat with Traders is hands down one of the best podcasts out there for anyone interested in trading.

Now I feel like I’m probably rambling… but…

GET YOURSELF A TRADING PLAN.

Honestly, I truly believe it’s the best way to improve your results if you’re in the FX market.

Copy someone else trading plan, (or spend countless hours trying to build one)

Backtest it (it’s worth doing the work!)

Refine it

Make it more personal, something that fits your personality

Backtest it again, keep updating it

Write down your rules

Stick to it.

The only way you can improve your trading is to have a process, otherwise you may just be lucky or unlucky but you wouldn’t know because your trading is not consistent.

Being consistent with your process, will turn you into a consistently profitable trader.

Anyway, I hope you enjoyed this article, if you did it would mean the world to me if you could share it! Or let me know in the comments what you would do!

Tag: process trading

My Advanced Self Review