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BRIEF THERAPY GOAL:
BRIEF THERAPY GOAL:
Exits and Market Structure
Exits and Market Structure
Grading Protocol
Grading Protocol
Before I speak about grading exits, I would like to suggest at least in my case, that I make a distinction between two potential Brief Therapy goals. The first being that of grading a holistic view of the markets before they open, and the second of grading exits. Regarding the first, using Profile theory to identify various timeframe market participants, utilizing probability statements based on Profile theory to identify support and resistance areas. In other words, a macro view of the market structure. I think this is a brief therapy goal that could work very well as a surrogate for grading exits if you are an active trader. As an example; a trader that trades counter trends in a trending market as well as the main trend and a trader that trades balancing markets that rotate most of the day. I say this in an effort to be less arbitrary and more objective when grading exits, as a trader’s style may make it very difficult to grade an exit simply based on a price target. Take for instance a trader that has the direction right and is short from the high of the day and stays in until the market closes on its low, that trader would get an “A”; but if a trader that trades the counter rally’s on the way down, while still having the general direction right, could not be graded in the same manner due to their trading style and frequency of trade. Hence, if you instead separate out the brief therapy goal of viewing the market in a macro view, one could then grade on equal footing as to whether the trader had a correct view of the market’s direction initially, hence not marrying the directional movement and potential trade maximization together. This way a traders style of trade does not compromise the ability to grade exits objectively. This way the grading of exits is not tied to discipline within the context of patience and price targets.
Before I speak about grading exits, I would like to suggest at least in my case, that I make a distinction between two potential Brief Therapy goals. The first being that of grading a holistic view of the markets before they open, and the second of grading exits. Regarding the first, using Profile theory to identify various timeframe market participants, utilizing probability statements based on Profile theory to identify support and resistance areas. In other words, a macro view of the market structure. I think this is a brief therapy goal that could work very well as a surrogate for grading exits if you are an active trader. As an example; a trader that trades counter trends in a trending market as well as the main trend and a trader that trades balancing markets that rotate most of the day. I say this in an effort to be less arbitrary and more objective when grading exits, as a trader’s style may make it very difficult to grade an exit simply based on a price target. Take for instance a trader that has the direction right and is short from the high of the day and stays in until the market closes on its low, that trader would get an “A”; but if a trader that trades the counter rally’s on the way down, while still having the general direction right, could not be graded in the same manner due to their trading style and frequency of trade. Hence, if you instead separate out the brief therapy goal of viewing the market in a macro view, one could then grade on equal footing as to whether the trader had a correct view of the market’s direction initially, hence not marrying the directional movement and potential trade maximization together. This way a traders style of trade does not compromise the ability to grade exits objectively. This way the grading of exits is not tied to discipline within the context of patience and price targets.
I was thinking along this line of reasoning regarding a scale for grading exits that would take a more simplistic view regarding both types of trading styles, those that are short term oriented hence more aggressive and those that are less aggressive. Instead of taking a day’s range and simply dividing it up into fifths, (if your scale is “A”=5, “B”=4, “C”=3, “D”=2 and “F”=1) and grade your exit based on what area of the range your exit was in relation to the entry or a predetermined price target , (the caveat being that it might work good if you only trade once a day), I would argue that the following protocol and scale is a bit less discriminating, as its touchstone is based on accuracy rather than discipline or patience. With the following scale and protocol for grading exits, a trader’s style would not be compromised if instead of holding on to a trade looking for one single target, they instead trade actively . For active traders maybe the answer is to separate these two goals! That being the goal of grading a macro view (identifying market structure and price targets based on profile theory), from that of the goal of grading exits. The macro view of the markets could be graded by using a scale of A-F, as it could be based on where the % of the range that was identified actually occurs when it is realized at the end of the trading session. This approach in no way would comprise the frequency or style of trading, but would still hone ones understanding of market structure, and not confuse trading discipline with trading frequency. This way a trader could still have goals in my mind regarding price targets, (grading them separately) but not grade the exits based on specific targets. This way a trader can use a more simplistic scale, with a more objective view that is tied to profitability and is not compromised by ones trading style or trading frequency.
I was thinking along this line of reasoning regarding a scale for grading exits that would take a more simplistic view regarding both types of trading styles, those that are short term oriented hence more aggressive and those that are less aggressive. Instead of taking a day’s range and simply dividing it up into fifths, (if your scale is “A”=5, “B”=4, “C”=3, “D”=2 and “F”=1) and grade your exit based on what area of the range your exit was in relation to the entry or a predetermined price target , (the caveat being that it might work good if you only trade once a day), I would argue that the following protocol and scale is a bit less discriminating, as its touchstone is based on accuracy rather than discipline or patience. With the following scale and protocol for grading exits, a trader’s style would not be compromised if instead of holding on to a trade looking for one single target, they instead trade actively . For active traders maybe the answer is to separate these two goals! That being the goal of grading a macro view (identifying market structure and price targets based on profile theory), from that of the goal of grading exits. The macro view of the markets could be graded by using a scale of A-F, as it could be based on where the % of the range that was identified actually occurs when it is realized at the end of the trading session. This approach in no way would comprise the frequency or style of trading, but would still hone ones understanding of market structure, and not confuse trading discipline with trading frequency. This way a trader could still have goals in my mind regarding price targets, (grading them separately) but not grade the exits based on specific targets. This way a trader can use a more simplistic scale, with a more objective view that is tied to profitability and is not compromised by ones trading style or trading frequency.
Instead of basing the touchstone for grading exits on discipline, patience or price targets, why not base them on profitability? The simplistic scale I would present for grading exits would be this; If the trade was profitable, an “A”, if it was a scratch, a “C”, if it was a loss, an “F”. Using the “A”=5, “C”=3 and “F”=1, with a large data set, you would get a nice smoothing of how good your exits were in relation to profitability, thus not discriminating against a particular trading style. I think this might work well for any type of trader. Then you could set other Brief Therapy goals for entry’s, reversals, discipline, patience or any other thing you would like to work on using other criteria and protocols that could be better suited for that particular goal. I will address that in future Brief Therapy goals as I set them for my own edification. For now, regarding the grading of Exits, and the grading of the larger Macro view of the Market Structure, I will use the above mentioned protocols.
Instead of basing the touchstone for grading exits on discipline, patience or price targets, why not base them on profitability? The simplistic scale I would present for grading exits would be this; If the trade was profitable, an “A”, if it was a scratch, a “C”, if it was a loss, an “F”. Using the “A”=5, “C”=3 and “F”=1, with a large data set, you would get a nice smoothing of how good your exits were in relation to profitability, thus not discriminating against a particular trading style. I think this might work well for any type of trader. Then you could set other Brief Therapy goals for entry’s, reversals, discipline, patience or any other thing you would like to work on using other criteria and protocols that could be better suited for that particular goal. I will address that in future Brief Therapy goals as I set them for my own edification. For now, regarding the grading of Exits, and the grading of the larger Macro view of the Market Structure, I will use the above mentioned protocols.
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