INTRODUCTION TO THE TRADING SUCCESS MASTERCLASS BY RAY BARROS:
We know that over 90% of retail traders lose money. The essential question is, “why”?
To answer the question, we need to be aware that trading success is a function of the 3Ms:
Method x Money x Mind
Many retail traders don’t have a written method. The reason for this is the way that Method is traditionally taught.
We are told that we ought to be either mechanical or discretionary ruled-based traders. The method we choose depends upon our personality.
For the retail trader, this approach amounts to ensuring failure. Let’s see why:
#1 A mechanical system's strength is its simple execution rules
Its weakness is the tendency to have prolonged drawdowns because the assumptions on which it is based are invalid.
For example, a trending system defines an uptrend when a short-term moving average is above the longer-term.
As long as this condition holds true, the system will make money. But, in a sideways market, the system will lose money until the uptrend resumes.
#2 A discretionary ruled-based system’s strength lies in accurately identifying the trend.
In this way, it reduces drawdowns.
Its weakness: discretionary ruled-based systems rely on a theoretical explanation of market action.
It is not easy to convert the theory into a set of execution rules.
Most retail traders create such a complex set of rules that they find it impossible to execute.
The 4-Phase Framework has proved to be such a boon to retail traders? Because we have adopted the maximum “Discretionary AND Mechanical” rather than the traditional “discretionary or mechanical.”
Benefits Of Equity Trade Journal:
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Ascertain Each Setup’s Viability
Assist You to Work on Your Weaknesses
Gather Instrument-Specific Data
Helps You Set up Incremental Goals
Great For Monitoring Your Growth
Holds You Accountable
Manage Risk More Efficiently
Helps With The Psychology of Trading
Brings Consistency