The “05/35” Exercise
I want to share an exercise that you can do throughout the trading session. It will make you better. I designed it for my NADRO students, but I’m sure it can be easily adapted to your own methodology.
What are we going to do?
We’re going to have a timer go off at five minutes past the top of the hour (such as 9:05, and five minutes past the bottom of the hour (such as 9:35). Have this go happen every 30 minutes for the entire session. When the timer goes off, I want you to observe and write. More on that later, but as you can see this is a very simple process to follow.
Why are we going to do it?
Because I said so of course. ;) Kidding aside, this is a great exercise that will give us the right amount of ‘game film’ from our session. That is a good objective account of not only what happened, but what you could truly see at those times. Light bulbs are already going off for some of you, good. You see, most traders think that taking a look at the trades they made that day is the best account of ‘what happened.’ In reality, there was so much more.
The best example I can give you of the value of this would be the following. During your review, you look back at the chart and let out an all too familiar mumble, “Oh you are so stupid, why did you not buy there! It was perfect!” This usually is followed by some general rationalization, and more griping, and promises to do better tomorrow. However… if you had done an 05/35 exercise during this day, you would have an objective account of what you were capable of at the hard right edge of the chart. This is massive. You would now, at a bare minimum, be able to see if 1) you were indeed aware of that missed opportunity in real-time, or 2) you were actually clueless - maybe even looking for trades in the opposite direction of this ‘perfect missed opportunity’ in hindsight. Again, this is massively helpful information for developing as a trader. We know now where to even begin the complex process of making meaningful adjustments to our trading.
Most traders are lost in a sea of rationalizations and promises to do better.
You can be more objective about what you can see. You can now use this information to improve your vision.
How to do the 05/35 exercise
Things you will need:
A journal (as a trader you should already be keeping one of these). It can be electronic or old-fashioned.
A loop timer. You need a reminder alarm to alert you every half hour throughout the session. I use a free one online.
If you’re focused on say, CL, then start the loop timer and do your first entry at 9:05/ET. If you’re an ES trader, for example, then start your timer and make your first entry at 9:35/ET.
Your entries should consist of the following:
What you can see developing in the market relative to your prep/hypos - how the narrative is unfolding thus far.
What you can see with lower timeframe ‘here and now’ tools such as order flow. What is it telling us here and now?
Are you keenly stalking any upcoming trade opportunities? Are you decidedly sitting on your hands in ‘no real opportunity here’ mode?
How is your psychology and/or emotion? Could be a n/a if all is well. Could be something noteworthy. Be an objective observer of this, not a Spanish Inquisition panel.
That’s really it. Short and sweet. Doable, but impactful I guarantee.
The last part is to tie this journaling exercise into your review process. Guess what? Now you have a much more objective way to review your true capabilities for your current level of development.
Trade well,