Process-Driven Trading: Trading Amongst Quality

We oftentimes involve heed that traders should hold upward physical care for driven too strictly follow their physical care for equally a way of avoiding psychologically-driven biases too pathetic trading practices.  This draws upon an analogy betwixt trading too the running of a manufacturing or service business.  In the trouble organization setting, y’all are looking for consistent, high quality.  Variability of output = depression quality.  For example, if you’re manufacturing a drug, y’all desire the production physical care for to plough out the same pill all the time.  If you’re a delivery service, y’all desire consistent on-time delivery–and y’all standardize each pace of the physical care for to brand certain that happens.

Essential to process-driven character command are 2 ingredients: 1) measuring of outcomes too 2) identification of the activities that consistently generate those outcomes.  In the basis of medicine, that has led to a focus on number enquiry too the creation of evidence-based handling protocols that standardize best practices.  If y’all have surgery from an evidence-based handling center, many of the decisions that are made, from the sum too type of anesthesia to the sterility of the operating room too the method of incision, volition hold upward set out equally protocols too derived from rigorous, controlled number studies.

When traders tell that they are “following their process”, what they should hateful past times that is that they convey intensively studied what makes them coin too what does not; identified their best trading practices; codified these best practices equally protocols to follow; too and thence tracked their fidelity to these evidence-based practices.

In other words, a trader who is genuinely process-driven should demonstrate:

1)  Reliability – They do the same affair inward the same province of affairs each time;
2)  Validity – What they do is known to termination inward greater positive outcomes than next other procedures.

Most traders who speak of existence process-driven do non genuinely rail reliability too validity.  When they speak nearly existence process-driven, what they hateful is that they follow a routine.  Routines are necessary for character control, but hardly sufficient.  Rowing a boat inward a consistent vogue doesn’t assist if you’re headed inward the incorrect direction.  If traders don’t rail outcomes, position the practices that generate favorable outcomes, too *then* basis routines inward those practices, they are non trading alongside quality.

Trading alongside character way putting equally much fourth dimension too examine into studying trading surgery equally studying markets.  The process-driven trader doesn’t only define a routine too follow it blindly.  Rather, process-driven trading way that y’all position too sympathise what plant too and thence systematically move to a greater extent than consistent inward executing that.

Would y’all wing an airline that operated alongside the same character command equally y’all demonstrate inward your trading?  

It’s all nearly doing things correct and doing the correct things.

Further Reading:  Quality, Minds, too Markets
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