A Process For becoming a professional Speculator alone

Coach Valk

If you want to go fast, go alone.

Being time-constrained means needing to go fast. Speed is appealing yet it has its drawbacks. Rushing can lead to mistakes or accidents and if you're heading in the wrong direction, going fast just makes things worse, faster.

Learning to speculate alone gives you time flexibility but without guidance from a coach or an expert community, it's easy to get lost and actually waste a lot of time.

The goal of this post is to suggest a process for learning to speculate alone from total beginner to professional while keeping the aim clear.

How to cope with starting from scratch

Doing something "professionally" often means our goal is to make money. In this post, we’ll assume that making money is our main objective. Any action that doesn't bring us closer to making money must be dropped.

To go from beginner to professional we'll use 4 "modes" of action:

. explore
. practice
. consolidate
. operate

Each mode has its own objective, but ultimately they'll help towards making money. To make it concrete, let's imagine our goal is to become professional coffee drinking influencers.

In explore mode we seek to discover and understand. Exploration can take two forms :

• targeted exploration: we explore what we know we don't know (e.g., we don't know where the best cafés in Paris are)
• free exploration: we explore without a specific thing in mind (e.g., while wandering in Paris, we discover a cat café where one can drink a coffee while petting cats)

In practice mode we apply what we've learned with a specific objective in mind.

We have found what seemed to be the best cafés in Paris, Now comes the time to drink their Capuccinos and see how they fare.

In consolidate mode we formalize what we discovered and create tools to simplify our life in the future.

• we could write in our notes the best cafés and their addresses for easy reference
• we could develop a ranking system for cafés to harmonize our reviews

Finally in operate mode we focus solely on achieving our main objective: making money. With our café rankings in hand, we might write and sell a book for tourists visiting Paris.

If we use an acronym to remember those 4 modes we get EPCO : Explore, Practice, Consolidate, Operate. That's ugly, and hard to remember

Let's mix the letters a bit : "E"P"C"O" -> "O"P"E"C"(nope we're not exporting petrol here) -> "C"O"P"E" (yay that sounds easy to remember!)

COPE: Consolidate, Operate, Practice, Explore : A handy acronym that will help you COPE with the process of becoming a professional.

While this acronym doesn’t reflect the exact sequence, it’s a useful way to remember it. In real life, the steps don’t always follow a strict order anyway. You might explore then consolidate or practice first. You may even try to operate without exploring (hint: not recommended).

Applying the COPE model to learn speculation

Here’s how we’ll apply the COPE model to learn speculation.

Explore mode

In explore mode, we’ll focus on anatomy and chart analysis.

Anatomy involves studying the shape and quantity of market elements, such as bars, volume, trends or price stagnations. The goal is to identify and name these patterns for easier analysis.

With anatomy we turn "this bar with a tight body and a long wick at the bottom" INTO "this hammer". Thank you anatomy!

Chart analysis will help us recognize recurring patterns that can lead to profitable trades. This can be done in two ways:

• Story analysis: We view the entire chart and interpret it if the chart was telling us a story.

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• Blind analysis: We don’t view the whole chart and make hypotheses as we play the chart at accelerated speed.

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Blind analysis has the advantage that we are not influenced by the future when we make our hypothesis. Blind analysis takes more time to do so its better suited for simulated trading. For fast exploration, story analysis is the way to go.

Consolidate mode

To consolidate our knowledge we'll:

• create a "market language document" where we will put the vocabulary, rules and other, communication related things that we need to express ourselves. The goal of the market language is to be able to communicate in a very acurate when it's needed.

• create a playbook with tactics that include triggers for entering and exiting trades

• compile "meta-analysis" based on analysis documents to identify realiable patterns to trade and their associated context.

In the practical and operational mode, consolidation will involve doing REX (Return on EXperience) and make decisions based on those REXs.

Practice mode

Before each practice session, we’ll set a specific goal, whether it's applying a tactic from the playbook or training emotional management.

The 3 types of practice are :

• Simulator trading: we practice with historical data in simulator mode
• Baby trading: we practice live with the minimum position size
• Warmup trading: we practice live with smaller-than-usual positions to account for personal context change(new tools, not traded for a while..).

Every practice session will happen like this:

1. start checklist
2. practice
3. stop checklist
4. retro analysis

we will Never practice live with fake money. Live is the slowest way to learn because we cannot accelerate time. It's also the only way to really have to manage emotions with real money at risk. So when we go live, we go with real cash (Baby trading is perfect to start and should represent no danger for our capital).

After practice we'll do a "retro analysis". This means reviewing our trades and document lessons learned in the Return on Experience document (REX).

The REX document will then be used to update all our other documents

Operate mode

We're now ready to go for the money. In operate mode we do one thing only:

operational trading

Operational trading means we trade by following our playbook with discipline.

A trading session will happen like this:

1. start checklist
2. operate
3. stop checklist
4. retro analysis

Are we susccessful yet?

We will evaluate our success as an operational trader across 3 dimensions :

1. balance: keeping a healthy personal life while trading (body, mind, family, friends)
2. discipline: strictly following the playbook (unless strong context reason)
3. money: Be profitable

Documents for Successful Speculation

Here are the documents we'll use:

• OKR (Objectives and Key Results): defining our focus and mesurable goals. This document must be printed and displayed on the workspace at all time to be read everyday.
• man : A manual of all the knowledge/rules we accumulated and want to keep.
• market language
• playbook
• story analysis
• retro analysis
• meta-analysis
• REX
• trade log : a document that tracks everytime we traded and what we did. (type of trade like simulator/practice/operational, start_time, end_time.., number of trades.. win rates, reward rates..)
• checklists
• roadmap : a plan for the next months to meet our objectives. The plan will include deadlines to reach our key results
• livemap : a description of what we really did (to compare to the roadmap)

Once a month we'll do the livemap and compare it to the roadmap.
Once a quarter we'll update the roadmap based on our progress in the livemap

Everything can be updated at any moment if context requires it.

Godspeed speculator.