Good morning, ladies and gentlemen, this is Andrew Lockwood, your captain speaking! We're aboard the 777 bound for Dallas, Texas
machine speaking
Now, you've often heard me in the past talk about the correlation between what
pilots do and what successful traders do. Now, before you get too concerned, yes I am a
qualified pilot, licensed pilot but not qualified or no Boeing 777s that you
just saw me land quite badly there at Dallas International Airport. That was
actually a commercial flight simulator based at Heathrow London. A great deal of
fun a lot of the airports have them, a lot of them open to the public for a bit
of money. I recommend you do it if you ever get a chance really was good fun
don't be worried you're not gonna be hearing captain Lockwood coming over
there tonight any time soon in fact that they do my pilot's license
a few years back in the Philippines I actually bought this amphibious float
plane and was having a great deal of fun buzzing around the $7000 islands of the
Philippines landing on beaches and so forth there you go it's a few snaps of
me there on my plane but what I did learn when doing my private pilot's
license course was pretty much the same as what goes on in the commercial
cockpit it's all about repetition repeating a process that's been proven
successful and safe in the past and that's exactly what we need to be doing
with our trading let me remind you to subscribe to the channel if you don't
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now I know I often refer to this topic in a roundabout ways in many of the
videos that I do and that's because this topic is so important it needs special
emphasis now a lot of you are going to be watching this video that are
struggling with their trading some of you of course will just be researching
this trading business is it worth getting into seeing what it's all about
but I can tell you this if you follow what I will say in the
next few minutes it could determine whether you are going to make it as a
trader or not and you don't need to spend the thousands on a trading course
to be told this and you know what it has to be one of the most simplest things
that we can do in our trading that's how unfortunate that so many do not do it
it's basically about having a checklist a written down literally checked off set
of wars that we analyze and do before we take each and every trade before we
enter the trades and before we exit the trade because every trade you do should
be in accordance to some pre thought-out tested set of ores not just to be
relying on that gut feeling if you rely on the gut feel how will you know how we
like your trading is your strategies how will you be able to scale up with
confidence without knowing if you just got lucky so we need to see the defined
rules of entry and the define rules of exits written down and then gather the
metrics for this strategy now some traders undoubtedly out there we had a
lot of experience will be training without a physical checklist now I'm
sure if you've been doing for years a lot of it becomes second nature but my
advice is this if you've been trading with the experience for them to pay less
than five years you should be writing it down and it should be checking it off by
far the biggest challenge when it comes to trading are the emotions we know that
now using a checklist helps massively in controlling these emotions a checklist
enables us to remain objective so when we see a potential set up we can check
it off to ensure that it complies with our back-tested strategy now it's quite
likely that when you start your checklist you're gonna see a reduction
in the number of trades which is most probably a good thing as you'll be
cutting out a whole bunch of losing trades you can also be cutting out some
winning trades which is also not necessarily a bad thing because what
it's doing is cutting out the winning tray
not really part of a strategy in the first place so you just lucky on those
winning trades and we really want to not to rely and we really don't want to be
relying on luck too much we want to take luck away from our trading so what is a
checklist well let's assume first off that you've got your back tested set of
walls a strategy that you know has worked in the past it's got a positive
edge and you know the metrics behind the strategy you don't know the metrics
check out the video on the metrics it's a great video I'm sure you're going to
find it useful now if you don't have a back tested strategy then I'll say this
there's no point in having a checklist you could be forming a checklist on a
flawed strategy in which case the checklist will be as useful to you as a
chocolate teapot so make sure you have a back tested strategy with an edge now
let's have a look at a very simple checklist of course yours is going to
look different be ten depending a course on your own strategy and your training
plan but this is just a board stroke look at a checklist what should be
included ok so here's an example of a very simple checklist now said every
strategy is different every checklist will look different but you can use this
as like a template of some of the things that you should be including in your own
checklist now the first thing I'll say is that you should always name your
strategy if you name the strategy it means you're taking ownership of the
strategy it actually means something now I've aptly named this the Aviator
strategy because we have the aviation theme in this week's video but make sure
you name your strategy ok so first up I think the first thing
you should have in your checklist is the training time now I've put down here
8:00 a.m. to 4:00 p.m. Eastern Standard Time
of course depending on where you are in the world you'll have your own training
time the reason why this is important it's gonna keep you out of trading
whenever you just feel like it trading in the middle of the night or when the
kids go out and you've got some spare time let's jump on the screens you want
to make sure that you keeping focused trading only set periods of the trading
day the same periods that you've done in your back testing you want to stop
trading just for this so sending out the training time very
important number to hit the trading entity I've listed here the euro dollar
the pound against the yen the US 30 whatever you intend to trade put it on
your checklist again this keeps you trading entities they're not used to
training you might have made some a little report like something and then go
and start trading it this is basically not trading that is gamle you want to
make sure that you're trading the entities the back-tested that you pre
set out in your trading plan next up we've got the trend confirmation on the
higher time frame always important to look at multi time foam analysis
certainly higher time frame analysis now you can use different ways of analyzing
higher timeframe looking for the trend you may be looking for for our eight
exponential moving average above or below the twenty one you may use an RSI
conformation above or but over the seventy you may even use a MACD don't go
to too much detail at the moment about the different indicators of course
there's lots of education out there on that but basically whatever you're using
for your higher timeframe confirmation should be checked off here make sure
that you're always looking at the higher time for him to get the bigger picture
this checklist will ensure that you do that structure daily support and
resistance and the weekly support and resistance it's very important as I said
to look at the higher time frame picture is very important that you've analyzed
what's going on in the daily and the weekly if this is your strategy where
your trend following for example you don't want to be buying immediately into
a massive level of weekly or daily resistance and of course you don't be
selling potentially into a massive level of weekly support so checking that you
made sure that the structure on the high timeframes has been checked off is very
important keeps you out of a lot of a trade especially if you're trading the
lower timeframes five-minute 15-minute time period you don't want to be buying
in front of a major level on the weekly keep you a lot of trouble that one
number five the entry now entry criteria is very important every strategy will
have course its own entry criteria you may be looking at price action patterns
you may be looking at hammock pin bars you may be looking at engulfing
patterns bearish in golfers bullish engulfing if that's your strategy make
sure they get ticked off when you see them so they can conform with your
strategy you may be looking at a pullback confirmation you may be using a
50% pullback or you may be using an exponential moving average touch
pullback or you may be looking at the trendline pull back as well whatever
your strategy says make sure you check it off before you even think about
taking the traits you've got there Davey support and resistance you've got the
price action patterns and of course you've got the trend confirmation make
sure that all conforming then we're looking at the fundamental dates check
this is very important so many times I've seen people lose big time on a
trade because they placed a trade right before some key big impact news
always be aware of the imminent news last thing you want to be doing on a
5-minute chart is buying 30 seconds before non-farm payroll or big market
moving events always check the fundamental this will also keep you out
of a lot of trouble make sure you check that off before you place the trade and
then we're looking at tape profit and stop-loss targets now if we strategy you
should have a maximum risk per trade whatever that is I put down here 1% it
could be less than that could be half or quarter it could indeed be 2% or
whatever it is but whatever you've got in your training plan in your strategy
plan make sure it's checked off to make sure that you're controlling risk on
each and every trade and the risk reward ratio a lot of strategies will have a
predetermined risk reward ratio that you should must accept now I've been down
here one to one you could have one after one at one point two to one or three to
one could even be less than one to one I wouldn't personally recommend training
less than one to one risk reward ratio but whatever has been set out in your
trading plan make sure you check it off before you place that trade to make sure
you're getting the agreed or back-tested risk reward ratio and the exits what
exit strategy are you going to be using are you going to be using the set and
forget if you're using the set and forget that B's you're setting your
profit targets he's setting your stop loss levels and if you're getting about
the trade if you've ticked set and forget there's no reason
while you should be meddling with the trade if you are trailing an exit
basically that means trailing behind base then you tick that box in which
case you can move your profit target you stop-loss targets and of course your
profit targets will move as well so make sure you pre define where you're going
to exit the trade before you enter the trade is it set and forget or is it
trail we don't want you changing that midstream and lastly this is quite
important its results where the check lists followed was a good trade or bad
trade don't confuse a good trade with a profitable trade and a bad trade with a
losing trade they're not the same a good trade is when you follow your checklist
a bad trade is when you don't follow your checklist and when you come to
doing your trade reviews or and you look at your journal to see how your trading
week or month has gone this checklist will be very important you'll be able to
see exactly the good trade the bad trades and you've got your win loss as
well that could be in pitch so it could be in dollars as well as you said this
is just a basic simple template of how a check list can look like and I'm sure
you'll find once you follow a checklist similar to this you're gonna find your
trading improve massively now the big challenge when using a checklist is to
resist the urge every time you have a losing trade to filter out those losing
trades by adding in additional criteria don't beat yourself up about the losers
remember you have a backtest of strategy it's worked in the past if it works from
the past it should work going forward don't start trying to tweak it once a
few trades go well remember the cycle of doom video conceit tweaking the strategy
to avoid the pain of loss it's all part of the law of large numbers we all have
losses by far the biggest challenge when it comes to trading are the emotions as
we know using a checklist it's going to help massively in this plight to control
these emotions think about that pilot again it's flying risky well possibly
he's walking across the road risky he's driving on the highway risky it's lying
in bed risky not letting the heart pump its blood around the system
has its risks but what we want to do in training is to contain these risk to
control these risks a checklist is used by pilots to control the risk the risk
of disaster a checklist in training should be treated exactly the same Melik
hope you enjoyed this video hope you found it useful give me a thumbs up if
you did give me a thumbs down if you didn't don't forget to leave a comment
and don't forget to follow us on Instagram and of course on Facebook if
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London time for a live streaming event where we discuss training opportunities
for the weekend till the next video happy trading and good luck