Good morning, ladies and gentlemen, this is Andrew Lockwood, your captain speaking! We're aboard the 777 bound for Dallas, Texas machine speaking machine speaking machine speaking Now, you've often heard me in the pasttalk 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 notqualified or no Boeing 777s that you just saw me land quite badly there atDallas International Airport.
That was actually a commercial flight simulatorbased at Heathrow London.
A great deal of fun a lot of the airports have them, alot of them open to the public for a bit of money.
I recommend you do it if youever get a chance really was good fun don't be worried you're not gonna behearing captain Lockwood coming over there tonight any time soonin fact that they do my pilot's license a few years back in the Philippines Iactually bought this amphibious float plane and was having a great deal of funbuzzing around the $7000 islands of the Philippines landing on beaches and soforth there you go it's a few snaps of me there on my plane but what I didlearn when doing my private pilot's license course was pretty much the sameas what goes on in the commercial cockpit it's all about repetitionrepeating a process that's been proven successful and safe in the past andthat's exactly what we need to be doing with our trading let me remind you tosubscribe to the channel if you don't already do so don't forget to hit thatlittle bell notification that way you'll be notified the moment the next videohas been released don't forget to follow us on Instagram and of course onFacebook if you follow us on Facebook you can tune in live every Mondayafternoon 2:00 p.
for a live streaming event where we discuss tradingopportunities for the week ahead now I know I often refer to this topicin a roundabout ways in many of the videos that I do and that's because thistopic is so important it needs special emphasis now a lot of you are going tobe watching this video that are struggling with their trading some ofyou of course will just be researching this trading business is it worthgetting into seeing what it's all about but I can tell you thisif you follow what I will say in the next few minutes it could determinewhether you are going to make it as a trader or not and you don't need tospend the thousands on a trading course to be told this and you know what it hasto be one of the most simplest things that we can do in our trading that's howunfortunate that so many do not do it it's basically about having a checklista written down literally checked off set of wars that we analyze and do before wetake each and every trade before we enter the trades and before we exit thetrade because every trade you do should be in accordance to some pre thought-outtested set of ores not just to be relying on that gut feeling if you relyon the gut feel how will you know how we like your trading is your strategies howwill you be able to scale up with confidence without knowing if you justgot lucky so we need to see the defined rules of entry and the define rules ofexits written down and then gather the metrics for this strategy now sometraders undoubtedly out there we had a lot of experience will be trainingwithout a physical checklist now I'm sure if you've been doing for years alot of it becomes second nature but my advice is this if you've been tradingwith the experience for them to pay less than five years you should be writing itdown and it should be checking it off by far the biggest challenge when it comesto trading are the emotions we know that now using a checklist helps massively incontrolling these emotions a checklist enables us to remain objective so whenwe see a potential set up we can check it off to ensure that it complies withour back-tested strategy now it's quite likely that when you start yourchecklist you're gonna see a reduction in the number of trades which is mostprobably a good thing as you'll be cutting out a whole bunch of losingtrades you can also be cutting out some winning trades which is also notnecessarily a bad thing because what it's doing is cutting out the winningtray not really part of a strategy in thefirst place so you just lucky on those winning trades and we really want to notto rely and we really don't want to be relying on luck too much we want to takeluck away from our trading so what is a checklist well let's assume first offthat you've got your back tested set of walls a strategy that you know hasworked in the past it's got a positive edge and you know the metrics behind thestrategy you don't know the metrics check out the video on the metrics it'sa great video I'm sure you're going to find it useful now if you don't have aback tested strategy then I'll say this there's no point in having a checklistyou could be forming a checklist on a flawed strategy in which case thechecklist will be as useful to you as a chocolate teapot so make sure you have aback tested strategy with an edge now let's have a look at a very simplechecklist of course yours is going to look different be ten depending a courseon your own strategy and your training plan but this is just a board strokelook at a checklist what should be included ok so here's an example of avery simple checklist now said every strategy is different every checklistwill look different but you can use this as like a template of some of the thingsthat you should be including in your own checklist now the first thing I'll sayis that you should always name your strategy if you name the strategy itmeans you're taking ownership of the strategy it actually means somethingnow I've aptly named this the Aviator strategy because we have the aviationtheme in this week's video but make sure you name your strategyok so first up I think the first thing you should have in your checklist is thetraining time now I've put down here 8:00 a.
to 4:00 p.
Eastern StandardTime of course depending on where you are inthe world you'll have your own training time the reason why this is importantit's gonna keep you out of trading whenever you just feel like it tradingin the middle of the night or when the kids go out and you've got some sparetime let's jump on the screens you want to make sure that you keeping focusedtrading only set periods of the trading day the same periods that you've done inyour back testing you want to stop trading just for thisso sending out the training time very important number to hit the tradingentity I've listed here the euro dollar the pound against the yen the US 30whatever you intend to trade put it on your checklist again this keeps youtrading entities they're not used to training you might have made some alittle report like something and then go and start trading it this is basicallynot trading that is gamle you want to make sure that you're trading theentities the back-tested that you pre set out in your trading plan next upwe've got the trend confirmation on the higher time frame always important tolook at multi time foam analysis certainly higher time frame analysis nowyou can use different ways of analyzing higher timeframe looking for the trendyou may be looking for for our eight exponential moving average above orbelow the twenty one you may use an RSI conformation above or but over theseventy you may even use a MACD don't go to too much detail at the moment aboutthe different indicators of course there's lots of education out there onthat but basically whatever you're using for your higher timeframe confirmationshould be checked off here make sure that you're always looking at the highertime for him to get the bigger picture this checklist will ensure that you dothat structure daily support and resistance and the weekly support andresistance it's very important as I said to look at the higher time frame pictureis very important that you've analyzed what's going on in the daily and theweekly if this is your strategy where your trend following for example youdon't want to be buying immediately into a massive level of weekly or dailyresistance and of course you don't be selling potentially into a massive levelof weekly support so checking that you made sure that the structure on the hightimeframes has been checked off is very important keeps you out of a lot of atrade especially if you're trading the lower timeframes five-minute 15-minutetime period you don't want to be buying in front of a major level on the weeklykeep you a lot of trouble that one number five the entry now entry criteriais very important every strategy will have course its own entry criteria youmay be looking at price action patterns you may be looking at hammockpin bars you may be looking at engulfing patterns bearish in golfers bullishengulfing if that's your strategy make sure they get ticked off when you seethem so they can conform with your strategy you may be looking at apullback confirmation you may be using a 50% pullback or you may be using anexponential moving average touch pullback or you may be looking at thetrendline pull back as well whatever your strategy says make sure you checkit off before you even think about taking the traits you've got there Daveysupport and resistance you've got the price action patterns and of courseyou've got the trend confirmation make sure that all conforming then we'relooking at the fundamental dates check this is very important so many timesI've seen people lose big time on a trade because they placed a traderight before some key big impact news always be aware of the imminent newslast thing you want to be doing on a 5-minute chart is buying 30 secondsbefore non-farm payroll or big market moving events always check thefundamental this will also keep you out of a lot of trouble make sure you checkthat off before you place the trade and then we're looking at tape profit andstop-loss targets now if we strategy you should have a maximum risk per tradewhatever that is I put down here 1% it could be less than that could be half orquarter it could indeed be 2% or whatever it is but whatever you've gotin your training plan in your strategy plan make sure it's checked off to makesure that you're controlling risk on each and every trade and the risk rewardratio a lot of strategies will have a predetermined risk reward ratio that youshould must accept now I've been down here one to one you could have one afterone at one point two to one or three to one could even be less than one to one Iwouldn't personally recommend training less than one to one risk reward ratiobut whatever has been set out in your trading plan make sure you check it offbefore you place that trade to make sure you're getting the agreed or back-testedrisk reward ratio and the exits what exit strategy are you going to be usingare you going to be using the set and forget if you're using the set andforget that B's you're setting your profit targets he's setting your stoploss levels and if you're getting about the trade if you've ticked set andforget there's no reason while you should be meddling with thetrade if you are trailing an exit basically that means trailing behindbase then you tick that box in which case you can move your profit target youstop-loss targets and of course your profit targets will move as well so makesure you pre define where you're going to exit the trade before you enter thetrade is it set and forget or is it trail we don't want you changing thatmidstream and lastly this is quite important its results where the checklists followed was a good trade or bad trade don't confuse a good trade with aprofitable trade and a bad trade with a losing trade they're not the same a goodtrade is when you follow your checklist a bad trade is when you don't followyour checklist and when you come to doing your trade reviews or and you lookat your journal to see how your trading week or month has gone this checklistwill be very important you'll be able to see exactly the good trade the badtrades and you've got your win loss as well that could be in pitch so it couldbe in dollars as well as you said this is just a basic simple template of how acheck list can look like and I'm sure you'll find once you follow a checklistsimilar to this you're gonna find your trading improve massively now the bigchallenge when using a checklist is to resist the urge every time you have alosing trade to filter out those losing trades by adding in additional criteriadon't beat yourself up about the losers remember you have a backtest of strategyit's worked in the past if it works from the past it should work going forwarddon't start trying to tweak it once a few trades go well remember the cycle ofdoom video conceit tweaking the strategy to avoid the pain of loss it's all partof the law of large numbers we all have losses by far the biggest challenge whenit comes to trading are the emotions as we know using a checklist it's going tohelp massively in this plight to control these emotions think about that pilotagain it's flying risky well possibly he's walking across the road risky he'sdriving on the highway risky it's lying in bed risky not letting the heart pumpits blood around the system has its risks but what we want to do intraining is to contain these risk to control these risks a checklist is usedby pilots to control the risk the risk of disaster a checklist in trainingshould be treated exactly the same Melik hope you enjoyed this video hope youfound it useful give me a thumbs up if you did give me a thumbs down if youdidn't don't forget to leave a comment and don't forget to follow us onInstagram and of course on Facebook if you follow us on Facebook you can tunein every Monday afternoon live 2 p.
London time for a live streaming eventwhere we discuss training opportunities for the weekend till the next videohappy trading and good luck.