V1 | Process Funnel

Summary

In this video, the speaker introduces the concept of the 'process funnel' for improving trading performance. By segmenting the trading process into specific stages—preparation, asset selection, opportunity definition, execution, data logging, and review—traders can make incremental improvements that lead to significant results. The speaker emphasizes the importance of aligning strategies with personal schedules and market flows. Using Sir Pickle’s strategy of liquidity ranges, the process funnel enables traders to refine their decision-making and execution, aiming for higher-performing trades through continuous review and adjustment.

Takeaways

• 😀 The process funnel is a method to improve trading by breaking it into components, enabling small improvements that lead to larger impacts.
• 😀 Preparation is critical to success in trading, as it ensures clarity of mind and a focus on high-probability setups.
• 😀 Asset selection should be based on high liquidity pairs with strong news drivers to align with major market flows.
• 😀 Identifying opportunities involves seeking setups that have clear internal and external range liquidity, ensuring a higher probability of success.
• 😀 Execution should focus on key levels, with stop-loss set at invalidation points and take-profit targets at 2R to maintain risk management.
• 😀 Data logging is essential for tracking emotional states and market conditions, helping to identify patterns in both winning and losing trades.
• 😀 Reviewing past trades from an objective perspective allows for better decision-making and helps refine strategies over time.
• 😀 Consistent review of the daily report card and weekly trade analysis provides insights into performance and potential areas for improvement.
• 😀 The importance of aligning trading strategies with personal schedules and avoiding forced fit strategies to prevent burnout.
• 😀 The process funnel helps you identify where issues lie in your strategy (e.g., preparation, execution, etc.) so you can make targeted adjustments.

Q & A

What is the process funnel in trading?

The process funnel is a strategy that segments your trading process into multiple components, allowing you to improve each area slightly. Even small improvements can have a significant impact on your overall trading performance by affecting the rest of your trading process.

Why is the process funnel important for trading success?

The process funnel is important because it helps identify areas where improvement can be made. Each small change, when implemented correctly, can lead to larger, more impactful results. It also helps optimize every stage of the trading process, from preparation to execution.

What personal restriction does the trader mention in the script?

The trader mentions being the CMO of FX Replay, which makes it difficult to sit at the charts all day. They need a strategy that works around their busy schedule, without the need for constant monitoring of the markets.

How does the trader select a strategy that fits their personal restrictions?

The trader searches for strategies that align with their schedule and limitations. For example, they found Sir Pickle's internal and external range liquidity strategy to be suitable because it fits with their higher time frame swing strategy and allows them to trade without constant chart monitoring.

What steps are involved in the preparation phase of the trading process?

In the preparation phase, the trader reviews the news to identify assets that might be affected by volatility. They then mark key levels on the monthly, weekly, and daily charts, flagging the assets that are likely to be in play for the upcoming day or week.

Why is preparation critical in the trading process?

Preparation is crucial because it ensures the trader has a clear directional understanding of the market, helps avoid poor setups, and focuses on high-quality opportunities. It sets the foundation for successful trading by making sure the trader is aligned with key levels and market movements.

What is the significance of asset selection in the trading process?

Asset selection is important because it allows the trader to position themselves in line with major market flows. By focusing on assets with high liquidity and news drivers, the trader can avoid trading in consolidating markets and instead look for trending opportunities.

What does the trader look for when identifying high-probability opportunities?

The trader looks for setups where there is a clear internal and external range liquidity flow, with a well-structured fair value gap on the hourly time frame. This increases the likelihood of winning trades by ensuring the trade aligns with the market's direction.

What role does data logging play in the trader's process?

Data logging helps the trader analyze market conditions, emotional states, and trade outcomes. By logging both quantitative and qualitative information, they can identify patterns in their winning and losing trades, which helps refine their strategy over time.

How does the trader review and improve their trading decisions?

The trader reviews their trades weekly using a report card to analyze both successful and unsuccessful trades. They take a clear-headed approach to reviewing, avoiding emotional responses immediately after trading. This allows them to objectively assess what worked and what didn't, helping improve their decision-making skills.