EP 019: How to form the basis of a solid trading plan, and follow it with absolute discipline w/ @StuartMcPhee

Aaron Fifield Podcast 6 Comments

What’s up team?

I’m not sure how it happened, but this interview somehow slipped through the cracks. I actually had the conversation with this weeks guest around November last year (2014), and it’s been tucked away in a folder ever since.

But let me introduce you to this weeks guest – Stuart McPhee from Melbourne (Australia), he’s an equities and forex trader who has been involved with the markets for around about 20 years. And he is also the Author of ‘Trading in a Nutshell’.

Our discussion was heavily based around trading plans, covering things like, what exactly is a trading plan, how to create one, and then the trickiest part of all – how to actually follow it with discipline. Actually, Stuart shares a very simple discipline hack that will help you to follow your plan for the long term, not just the next week or so.

Even though it’s taken a while to surface, I’m pleased to finally share this interview with you.

“Keep it simple. We have a natural tendency to complicate things, and in trading simple works very well.”

Tweet this

“Too many traders, treat trading as a hobby.”

Tweet this

Lessons learnt in this interview:

  • Why a combination of time and perseverance will lead you to become desensitised with losing trades.
  • By trading less, Stuart feels no pressure to take the best of a bad bunch, and has the flexibility to only execute when high quality setups appear.
  • Stuart discuss how fundamentals and news have a huge impact on the markets, but little to no impact on his trading.
  • The importance of a trading plan, failure to plan is planning for failure. Stuart gives a real life case study on how the large majority of traders have no plan, yet also believe they need one to succeed over a period of time. He highlights a true disconnect here.
  • How to form the basis of a trading plan, and what you should include as an absolute minimum. A trading plan is a compilation of your rules to protect you from making silly decisions on a routine basis.
  • To follow your trading plan is something that does not come naturally. Stuart shares with us the reason why it is difficult to change major behaviour, and one very simple discipline hack to ensure you stick with your plan for the long term.
  • Risk: With four letters, Stuart sums up where most beginners continually slip up. Additionally, he discusses the level of professionalism and time commitment that many novice traders lack.
  • Why we need to consciously simplify our trading approach – even though it is hard to be simple, and simple to be hard.
  • And much, much more…

Links and resources mentioned:

  • Recommended Reading – Market Wizards series by Jack Schwager. The book that had the most significant influence on Stuart as a trader. He also suggests if you read this book while starting out, reread it a few years later and you will be able to relate to so many things you previously glazed over, available on Amazon.
  • Trading in a Nutshell – This is Stuarts book which was originally released in 2001, and has since been updated and expanded for the 10th anniversary, also available on Amazon.
  • To learn more about Stuart, you can visit stuartmcphee.com.
  • Also be sure to catch him on Twitter, @StuartMcPhee.

Did you enjoy this interview?

  • Please leave a 5 star review on iTunes to support the show.
  • Subscribe to receive a free guide and an email when new interviews go live.
  • Post a comment below, what was your greatest takeaway from this interview?
  • Share this interview with your friends and followers.