The Trading Process & Manual
Welcome to the Trading Process
Today, I will take you all to a journey, a journey where a trader evolve from chaos, hype-chasing, and making erratic trading decision into a structured, systematic, and logical approach.
Welcome to the trading process. When I first started trading, I had no process, no system. My trading was emotionally driven, and led to significant losses, something you all might be familiar with. For nearly three years, this was the chaos of my trading. I initially started trading in 2018 by buying small cap altcoins and ventured more actively into futures trading when the bear market hit.
Both the altcoin trades and futures trades net me an initial success, $200-$20,000 in mere weeks. However, my approach was built on a foundation of glass. It was a patchwork of trend lines, blind faith in market narratives & participants, and marrying into biases about specific projects. I had absolutely zero appreciation for the complexities of the market.
I realized I wasn't blaming anyone else; the disappointment of failure was a driving factor that really inspired me to take this game seriously.
The Turning Point: From Chaos to Structure
Towards the end of 2018, I sat down and stopped trading for three months. This period, from November 2018 through to the end of January, was crucial. I didn't take a single trade. The urge was there, but I had been continuously losing, blowing accounts, and had no understanding of risk management, position sizing, or strategy.
My emotions were all over the place; I'd take trades late at night, check my phone at 4 AM, rush to my desk, and had no control, no structure. My life lacked balance, diet, sleep were all inconsistent.
After a period of dormant, I realize something need to change, a trading manual, a trading process is necessary. Without doubt, it's arguably the turning point of my trading career, one of the best things I've ever done. That for me set the foundation for where I am today. It wasn't the early wins, but the losses, failures, pain, and emotional baggage from the 2018 drawdown that inspired me to become better. I had gone from chaos to a structured process.
Through this process, particularly since the start of 2019, I've learned some real crucial lessons and am continuously evolving as a trader. Data is king. Without meticulous tracking and analysis, you're just guessing. Trading is a marathon, not a sprint. It takes years and years of continuous learning and refinement, just like any professional athlete or surgeon. If you enter the market without structure, process, routine, purpose, or training, you're going to get wiped out.
Your trading system must align with your strengths, mindset, psychology, and approach. Focus on the process and not the outcome. The process is continuous and should continuously evolve – it's a continuous refinement process where you want to really be preparing for the next 100 trades. Journaling is critical for this; you want to look at the performance of those trades, understand your trading system, strategies, and risk management. Having a routine, structure, and process, and continuously looking to evolve, are shared traits of successful traders.
Building Blocks of a Trading Process
My trading process, manual, and systems are the building blocks of my trading. Trading is often viewed as a game of strategy, but in reality, it's a well-structured process made up of several interconnected components. To achieve lasting consistency and success, every trader must build a solid foundation, a comprehensive system with these key elements.
I've drawn out the essential building blocks that make up my trading process and manual. It starts with understanding yourself. This was the foundational starting point for me in 2019, taking a good few weeks to work through and understand. It's very important to do this reflection before advancing on other segments.
Let's break down these components:
Understanding Yourself
This is the absolute foundation. Failure to do this is likely to lead to failure of the entire process. When I stopped trading for months at the end of 2018, I asked myself deep questions. If you can't explain just one of your strategies clearly, what business do you have trading? You need to take a step back, slow down, and really think about trading as a business, as a long-term career goal.
Routine and Goal Setting
This is about creating structure and habits. A consistent routine helps avoid emotional decision-making and fosters discipline. Having a plan ensures preparedness, focus, and clarity. I use weekly and daily trade sheets for this. Goal setting involves understanding what you aim to do, which markets you trade, and setting attainable daily/weekly performance targets.
Psychology and Mindset
In my opinion, this is perhaps the most important aspect of trading. Initially, I heavily emphasized technical aspects, thinking technical proficiency was key. But over the last few years, I've truly appreciated how important mindset is – I'd even give it an 80% weighting. It's about you as a trader against yourself, your discipline; your mindset is one of your greatest edges. Technical proficiency follows.
Risk Management
This involves mastering the tools to control your trading strategy. Without proper risk control, even the most robust system will fail. You can be highly skilled technically, but without a risk management system, you're one trade away from blowing up.
Technical Proficiency
This is about mastering the tools to analyze the market – understanding price action, reading indicators, perhaps using order flow. You build skills to devise strategies and setups to gain an edge.
Strategy Testing
This isn't just backtesting; it's forward testing, making observations, and getting a feel for the flow, rhythm, and intuition of trading your strategy. This is very important before you scale up position size, as you need to understand your best strategies and what it means to bring your 'A-game' daily.
Mastering Trade Execution
A solid strategy means nothing if you can't execute when price hits your level and meets your preconditions. This is key to capturing profitable setups and relies on timing, precision, and the ability to avoid emotional decision-making (fear, greed) during execution.
Journaling
One of the most powerful, yet often overlooked, tools. Documenting trades, reviewing decisions, and analyzing performance creates a feedback loop for improvement. This reflection and adjustment transforms an average trader into a professional, allowing you to fine-tune your approach and grow consistently.
Each of these elements plays a critical role in building a sustainable trading process. Mastering them all isn't optional; they're equally important and essential for long-term success. This sets you on the path to becoming more disciplined, consistent, and hopefully, profitable.
Understanding Yourself: The Foundation
The exercise of asking myself fundamental questions was something I did when I had no system. These questions feed into your manual. Trust me, if you follow this process and commit to mastering your mindset, you'll see significant change over time.
My trading manual, which I've been working on since 2019 and has evolved, has a specific structure. It starts with "The Trader Within," covering my mission statement, motivations, and trading goals. These goals are purely about what you want to achieve from trading, not just monetary aspects, but envisioning your long-term aspirations. Highlighting strengths and weaknesses helps you evolve into the trader you aspire to be.
This section reminds me that it's not just about the act of trading, but about becoming a trader by developing the right mindset, process, and discipline for consistent, high-level performance. My manual is my business plan; it provides structure, documents strategies, clarifies risk management, defines goals, and outlines my approach, helping me focus and improve.
Self-Reflection Questions
- Why do you want to become a trader? Is it for financial freedom, wealth building, the challenge, decision-making, or seeking independence?
- What are your trading goals? Are you focused on short-term profits or long-term growth and consistent returns through risk management?
- How do you define success in trading? Focus on comprehensive metrics like profit factor or expectancy, not just win ratio.
- What is your timeline for achieving success? How much time can you realistically dedicate?
- What are your strengths and weaknesses as a trader? Do you excel at discipline or struggle with impulsivity? Are you good at managing risk?
I'm logical, I think conditionally, I problem-solve, look for faults, stress-test, and think probabilistically. Trading allows me to apply these skills dynamically with immediate feedback, testing my skills and mindset.
Every trade is an opportunity to test and improve. My goal isn't just financial; it's reaching that elite level where I have a process and plan, can execute efficiently, accept losses, and trust the numbers over the long term to achieve sufficient expectancy, win rate, and profit factor to trade as a career.
Common Weaknesses to Reflect On
Common weaknesses traders face, which you should reflect on, include planning, risk setups, position sizing, impulsive decisions, execution, and failure to take profit consistently. Also, being quick to cut winners but holding onto losing positions, hoping for a bounce instead of cutting losses early. This can compound losses and lead to significant account drawdown from a single bad trade. These are weaknesses many, including myself, have experienced.
When I was struggling and returned to work in 2019 because I wasn't profitable enough to trade full-time, I had to be honest and realistic. That year helped me slow down, understand markets and trading, and focus on building my manual, process, structure, journaling, sizing, and reviewing performance. I took only 1-2 trades a week while working, journaling results to build confidence. I gained a good foundational understanding of what it takes to make it in this game.
Understanding yourself is key to building a strong foundation for success. It's about aligning your decisions and personal goals with your values. Taking the time to think about these questions will help you stay disciplined and adaptable when challenges arise. I hope these questions help you reflect on your motivations, goals, and mindset as a trader.