T-Model Trader Interviews James Orr - Part 1

Hello Traders.

I am starting something a little bit different today after speaking with T-Model Trader. I came to realise that I have never really opened up about my own trading (and life in general) outside of the blog posts I create. That means they are always things I think about, rather than allowing someone to interview me and put questions to me that they find useful/helpful.

Over the next few weeks, I will be posting up the interview conducted with T-Model Trader. There were no rules for this, and he was able to ask me whatever he wanted to. Some of the questions naturally lead to others, and some are out with the trading remit.

I hope you enjoy it!

James Orr

T-Model – Question 1

I have made mention recently about my daytime trading activities outside of the evening Decisive trading markets. I  start by doing an morning assessment of the market, which in this case was the major index here in Australia....the ASX 200. I write down very clearly what it is that I am seeing and establish my trading plan for that day. 

However, like "fear and greed" there is that other challenging twin called "trust and doubt". What I am starting to see is a distinct lack of trust regarding my assessments and because of this I am then not following through with that plan.

So I am wanting to ask you about the early stages in your development of the Decisive trading method. In that time, as you were pulling it altogether, I am assuming that the "trust and doubt" factor must have been a present emotional state for you as well.

What did you do to overcome this?

James Orr

I think with trading, we go through cycles of emotional states depending on whether we are having a run of wins or a run of losses. It is very easy after a run of winners to become somewhat euphoric and for the little voice in your head to chirp up with things like – ‘This is easy. I’ve finally mastered it.’

Similarly, it is just as common after a run of losses to think – ‘I can’t do this. I’m a failure. I’ll never make a good trader.’

Both are as damaging as the other. The euphoria leads you to lower your standards and believe that you truly are a master trader and have a secret knowledge of the market… And the market happily punishes you.

After the losses, you begin hesitating and avoiding perfectly good trades. What happens is you skip the ones that would have worked perfectly and you jump in on the trades that lose. It is like a self-fulfilling prophecy. You think you’re going to lose and your hesitation compounds the losses.

There are two ways to overcome this:

-       Develop a very good understanding of what you are doing. I back test until it feels like my eyes are going to bleed. The reason is that I begin to see the natural ebs and flows of the trading system. I can see how the losses come and yes, there can be runs of them and it doesn’t mean it is my fault. I can also see there are runs of winners and no, it isn’t because I am a trading God. This allows me to trust the system and focus on the methods, removing ‘myself’ as much as possible.

-       The second is simply by reducing risk. If you’re suffering stress especially, it is because the losses are too large. Reduce the money you are risking and it goes a long way to helping you relax and focus on the charts, not the money. A lot of beginners fall into the trap of believing they need to risk a lot to make a lot. What actually happens is they lose a lot, and usually all of it. Build slowly. The foundations hold the structure you want to build on top, so make sure your trading foundations are solid.

T-Model – Question 2

It sounds to me then that your personal progression as a trader and by extension the development of your trading plan wasn't the "singular great leap forward" but one of a series of graduations?

You mention the ebbs and flows of the trading system. I am thinking here about those people who become the truly great sport stars. The ones that seem to be able to do things above and beyond the general players (who are very good in themselves). 

I am interested as to whether this trading understanding is purely an outcome of the "bleeding eyes" back testing, or could there be other factors involved?

Do you think that instinct exists in trading? 

Or is that just a term for not following the trading plan?

James Orr

This is a difficult one to answer, because I don’t want to mitigate the hard work that goes into learning to trade, or the very real belief I harbour that anyone can become a trader.

I don’t look at it as though there is an ‘instinct’ as such. I suppose I look at it more in terms of what people describe as ‘natural talent’, but I have a very different way of looking at said ‘natural talent.’

For me personally, I don’t like the way people say things like – ‘I wish I were as naturally talented as him/her’. Or ‘It’s easy for them, they have a natural talent.’ You usually see that associated to sport stars or musicians, but it fails to come close to the reality.

‘Natural Talent’ comes with a heck of a lot of hard work. It is helped because, to develop that level of understanding, you need to have a passion for what you are doing. That in turn helps with the development because like I said with the ‘bleeding eyes’ statement, it takes a monumental amount of work. However, if you have a passion, the work doesn’t seem like work. It’s enjoyable, in a sadistic, want to cry, curl up and make it all go away at times sort of way.

So I don’t think I have a natural instinct, but I do think I have learned and evolved to have a very in depth understanding of what I am doing and what the markets are telling me at any given time.

It’s a series of graduations or small steps, sometimes so small that you feel like you’re standing still. But the more you work, the more of that ‘natural talent’ you seem to develop.

The trading plan is key, because it helps to remove the emotional aspect of trading. If you know what you’re supposed to be doing each step of the way, all you need to do is learn to ignore the internal chatter of your mind. If you don’t know what you’re supposed to be doing at all times, then that chatter mixes in with confusion and you are onto a sure fire way for blowing your trading account.

The reality is that most people are lazy. They don’t like to admit it, but they are. We have a natural tendency for it. We seek the easy way, the one that expends the least energy. So steps are skipped and shortcuts are searched for.

In life we see the result as people giving up on things – ‘I decided I didn’t want to learn guitar’ or, ‘I didn’t study enough for my exams’.

In life you can skip along like that without too much damage occurring. But if you bring it to trading, it will tear you and your balance sheet apart.

T-Model – Question 3

There are so many great points in your answers that my challenge here is to not get tangled up in wanting to explore every theme.

It is thou the last two sentences that seems to encapsulate the essence of the nature of trading development.

As you state, that it is possible to "skip along" in life and manage to not get beat up by the process. However, trading has this immediate effect and the mere whiff of complacency will get the trader clobbered.

You have mentioned bits and pieces regarding your trading evolution, however I would like to understand the period of time prior to the outcome of the present trading plan.....before the bleeding eyes.

Did you go through the usual array of experiences and challenges that most people seem to undertake in their trading journey? Did you get torn apart?

I am wondering if this stage might be a necessary one in order to take that step forward?

James Orr

The answer is absolutely, positively yes!

The markets took me to the cleaners. They left me a jittering wreck and severely out of pocket.

I jumped onto training courses from anyone who made it look easy and who showed large winning trades. I spent thousands on the courses and mentorship and then flushed thousands more down the proverbial toilet trying to follow their methods and their – financial freedom in X days – guarantees.

After that I went it alone and it took a long time before improvements started. I would say a year before I would have called myself competent, and another year before consistency came along.

As sadistic as it sounds, I did actually enjoy that period however. Not at the time, but looking back I can see how valuable it was for me not only in trading but in life in general. I was a servant to my emotions – fear, greed, anger etc. – and that really troubled me. I would sit down with one aim and then do completely the opposite because of those emotions.

Without getting too off track, it really made me evaluate ‘life’ and ‘me’. I began asking myself things like –

‘Well, if I want to do something but cannot control myself and do the opposite, who or what is really in charge of me?’

It was troubling in that I seemed to have no control over myself whilst at those charts and I tore myself up about it. However it also made me more determined to get control of myself.

That’s when the real progress started. I threw myself at the task and worked - really really worked. I realised that there were going to be no shortcuts. No one was going to help me. It was quite freeing in a sense – I felt for the first time that it was all up to me. If I failed it was on me.

I lost all sense of ‘life’ during that time. I just worked. On the charts, studying, reading, meditating, and anything else that I could.

I used to work 10 hour days and then come home, shower and begin my ‘real’ work (that of learning to become a trader) until I couldn’t keep my eyes open.

I can’t stress this point enough to beginners – even with that level of commitment, it took me two years. Understand that and allow yourself the time. You either commit to succeeding, or you will become one of the statistics who blow everything.