What exactly are playbook trades and why do the best traders swear by them?
|If asked to describe financial markets to someone who's never heard of them, you'd use terms like chaotic, random, volatile, unpredictable, wild, and never constant.
As a serious trader, your first step is to chunk down until you have a framework that brings order to your trading. Think of it like a playing field in sports. Within the field of play is when you can trade, and out-of-bounds is when you don't trade. But it's not only about being in the field of play. In team sports, players have unique roles and only engage in certain cases. Trading is no different.
A trading playbook refers to a catalogue of strategies deployed in certain cases. And as a result, they produce positive results over the long-term. It means they make money over x number of trades despite in trading where nothing is 100%. Traders refer to this as edge. When the market presents an opportunity to combine several playbook trades simultaneously, it can be satisfying and rewarding.
We're in the odds business, but confidence plays a role in everything we do, including trading. Has your trading confidence taken a hit? How would you feel knowing you are stacking known positive expectancy trades on top of each other? You'd feel full of confidence and not hesitate to act on your trade. Right? Hence why, the best traders swear by a trading playbook.
Your only tasks when live trading are:
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Recognise when the market behaviour matches a playbook trade.
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Execute the trade.
You're going to see a recent short and long trade. But before that, it's important to understand why there are always reports of high failure percentage of traders outside of professional trading. It's because these traders don't have an edge. i.e. no catalogue of trades that produce positive results over the long term. It takes years of knowledge and forward testing to evolve a trading playbook. If you go it alone, you'll likely never get there.
But the good scoop is you have a choice. You can learn playbook trades when you trade at a professional trading firm or work with a mentor who can teach you their extensive playbook. It's a legitimate shortcut to developing profitable trading. If you love trading, but poor results and little progress are painful, either option will get you past this.
Now, the examples are shared to show you:
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Order and form can exist in what is an otherwise chaotic and random environment.
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You can play the game on your terms, building your trust and confidence in trading.
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It's how serious traders can operate a trading business that has long-term positive performance.
The short trade is taken when four playbook trades occur at the same time.
The long trade is taken when three playbook trades occur at the same time.
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