THE MAIN IDEA OF THE PRIMESYSTEM

Irrespective of whether or not you believe in specific

strategies in trading, there are some aspects of
trading doing well which many new traders haven't yet
picked up on. As a trader, you need to do extensive
planning before attempting to execute a trade. Because
what is even more important than anything else is a
systematic journaling and optimization process. It's
essential, as afterwards, you have to figure out what
was good or bad. In this way, you will gather practical
information, which can we use to optimize your trading
strategy and do better in general. Planning, journaling
and optimizing are areas where many traders fail to be
efficient. That is often the reason why their capital
is gone before they even create a (proven) strategy. It
requires work. And nowadays nobody is willing to invest
energy and time into making something work. People are
chasing instant gratification and quick happiness.
Trading is a marathon and not a sprint, frame your
expectations right and look at your successes over the
timespan of years. A system tells you what to do and
when to do it, if you document your actions, thoughts,
and emotions accurately and consistently, you are
building data which you can use to analyze and optimize
your trading results to identify weaknesses and improve
where it matters to gain clarity about the impact of
your actions.

Long-term success can be planned, and the PrimeSystem

is all about generating predictable results over and
over again.

But it requires a few elements to be in place:

• Visualization of the future outcome

• Strategic Approach
• Discipline
• Trading Plan
• Execution
• Journal
• Post-Analysis
The PrimeSystem was developed over years of testing
using the process of trial and error. Greed, bad
trades, and high-risk flipping have cost me uncountable
amounts of money and pain. The PrimeSystem has become
the theme of this book because I want to show that from
'failure' something positive and outstanding can
happen. And now a few years later many more people,
than just me, are benefitting from my previous
'failures'. I can share this knowledge to help you. And
hopefully, you will also share it with someone else who
also needs a strict system like this. As trading became
so popular, it is an absolute necessity to train people
how to execute according to a system. In no other
profession, we are so close to our wins and losses.
Where we risk our hard-earned money. Put the thought in
it, study it and dedicate your life to absolute
accuracy and effectiveness. The PrimeSystem is an easy,
simple and repeatable process that improves your
strategy, awareness, journaling and optimization.
ELEMENT #1 - INTRODUCTION

To execute the PrimeSystem at an individual level, it

is very important to do so consistently at a highly
organized level, which requires strict discipline. You
need to be your own boss who will systematically
specify the following key parameters:

1) Visualization of the future outcome - What goals are

you trying to achieve and what is the exact scenario
you want to have in the future? This seems at the
beginning pretty simple. Later on, it will be part of
your natural personality. But for those who are
inexperienced with their personal development need to
understand that this is important. You need to be aware
of the purpose in your actions and where those can lead
you. Where do you want to be in 2 years? Do you
ultimately want to expand into different business
avenues?
2) Strategy – You need to act according to pre-written
rules. A precise blueprint, which could theoretically
be converted into code and a computer, would act in the
same way as you. Of course, as professional traders, we
have some more judgment, and our own perception is
heavily involved. This specific skill will grow with
weeks, months and years in front of the charts.
Unconscious competence needs endless hours in front of
the charts to develop.

3) Intent – What is the reasoning behind your preferred

strategy? What approach are you specifically following?
Why do you think that Strategy X might be better than
Strategy Y? Rethink your biased thinking. Try to be
rational and open-minded. Many new traders, for
example, think that "quick and big" profits come from
scalping, for whatever reason, but from the standpoint
of "not knowing how things work". Furthermore, scalping
is very attractive but rarely the best choice for new
traders as it could lead you down a spiral into running
after instant gratification with over-leveraged
positions.
Overall, the more work you put into your planning
process, the better you will be able to execute it in
your daily life. The data you collect enables you to
have a better optimization process and system.

Visualization of the future outcome

Every trading business should be built on a system

which is in your favour. If, however, the plans and
goals are too unrealistic, it can end up diluting the
impact of whatever is executed. It is, therefore, your
job to develop a clear and concise description of the
future that you would like to achieve.

A good trader will find a way to paint a high-

resolution picture, which is compelling and alluring
enough to motivate you through the harsh learning
process. Trader personalities are usually very good at
being able to visualize. Because they often come from
nothing or they just left a profession to rise from
zero in trading. They can see where they want to end up
and they paint a highly textured description, which
even others can relate to.

You need to walk with confidence on the right track. In

this step, we don't try to micromanage the process by
specifying specific vital points. We need our
visualization to be like an action plan.
An effective future picture for your trading career
will be tightly focused and richly detailed. It will
cover some key points:

• Your future financial position – in terms of

account size, lifestyle, financial freedom

• Your future market position – will people know you

for your skills? Will you get recognition?

• Your areas of operation – Will you trade your own

capital only? Will you be involved with account
management?

• Your approach to innovation – Will you try to share

your knowledge with others? Will you teach? Will
you develop software solutions for traders?

• Outsider perceptions – how is your organization

viewed by the broader community.
Great traders blend these critical elements into a
detailed picture of what they want their business to
become in the future. Sometimes this will be a
dramatically different future vision, and at other
times this will simply be an enhancement and refinement
of what already exists. This is the starting point for
the PrimeSystem and the core to understanding your
model. Define your goals as a trader. Those must be
daily, monthly and yearly goals. The daily goals you
make should accumulate to form that annual goal. It
will give you a sense of direction and purpose in your
trading. The daily goals should be explicitly focused
on your trading. The monthly and yearly goals should
focus on how you will take your trading to the next
level or how you will invest the money made into
different avenues. These goals must be specific and
intentional. There is no point having a list of goals,
which are vague and are not realistic. You must intend
to accomplish them. These goals must define who you are
and what your trading style is.

The reason for the PrimeSystem is not because we want

to do things so well that you smoke other traders. It
also doesn't mean your opponent is going to roll over.
The PrimeSystem is all about expecting things to go
wrong – and handling it. In aviation terms, I had a
model, a method, and a repeatable process that kept me
alive. That's Prime. I might lose a few points on the
way to winning the game, but I win more than I lose.
Strategy

The term "strategy" has a vast array of meanings in

trading. From a prime system perspective, a strategy
acts as the connective tissue between the future
picture articulated by you and the individual plans you
will develop and then execute.

In simple terms, strategy means to answer three key

questions:

• What am I going to be in the future as a trader?

• What resources do I have to get there?

• How am I going to do this?

The strategy is an aspect of trading which makes a huge
difference. A trader with the best strategy can
prevail, even in bad market cycles. The key to crafting
a great strategy is to identify the "centres of
gravity" – the critical leverage points where if you
apply pressure, you get the most bang for your buck. To
change a system, all you have to change is its centre
of gravity. To amplify the effectiveness of what you're
doing, attempt to change multiple centres of gravity
simultaneously.
How does this work in practice?

Consider the introduction of the iPod. Apple Computer

identified two key centres of gravity for the
commercial success of this device: Apple convinced the
music industry to license their songs for downloading
to a secure fee-based Web site Apple controlled. This
turned pirated digital copies of music into a new
revenue stream for the record industry. Apple also
designed a device, which looked more like something
consumers would want to use, and less like something,
only a computer geek would like to keep in their
pocket. They turned the iPod into a must-have fashion
item. By attacking both these centres of gravity at the
same time, Apple managed to create a new market
segment, which they could then control and dominate.
They were smart enough to pull this off whereas other
pioneers in digital jukeboxes fell by the wayside.
Apple is now licensing its iPod technology to others."
They then let the people who have to execute at the
customer level go to work with a full picture of
everything involved rather than just their narrow
specialist area of expertise. It is always essential to
understand the world of business and the practicalities
of it as trading itself is a business. Not only that,
but trading is also a gateway to invest in companies
with the money made as well as the creation of your own
business and investments in other assets.

Some good open planning rules-of-thumb are:

• Create an environment for yourself where your ideas

are recognizable for yourself and easy to remember
or see on a laptop or handwritten notes.

• Focus only on executing the strategy. Keep in mind

that you're responsible for developing your
strategy once you have a good understanding of the
overall basics.
The last key point you should openly plan is your exit
strategy. Products and services typically have a life
cycle. You have to plan what milestones will trigger
specific organizational responses. Your exit may
consist of actually leaving the business, or you may
choose to introduce a line extension to breath new life
into your established brand. Determine how and where
you will finish. This is with regards to the long-term
goal of trading. What is your ultimate goal to achieve
in life through trading? It is extremely important to
establish that sense of direction within your trading
rather than having no clue as to where you want to
head. You may plan that after earning a certain amount
of money through trading, you may exit the profession
and focus on other things. It may be you want to trade
for the rest of your life! It is important not to
ignore these long term issues as they will shape the
trader you are.
A great quote to always look to, in order to remind
yourself of what trading is all about is one by James
Murphy. It goes as follows: "Great trading strategies
are built around extraordinary individual execution;
the better the individual executes, the better the plan
performs. Take sales as an example. If an individual
improves its closing rates, the company benefits with
higher revenues (and the salesperson gets a fatter
commission check). In production, if an individual
contributes to the overall manufacturing efficiency,
the company becomes more profitable through reduced
costs. It's all very circular, but it begins with how
well an individual executes. But individuals rarely act
alone. Individuals are invariably part of a team; men
and women invariably work in groups. The goal of the
individual is to execute flawlessly. This achieves the
aims of the group – a flawless mission. When you do
this over and over again, exceptional performance
accelerates the evolution of the company." Trading can
often feel like a one-person job, but you may decide to
surround yourself with a business team. There is so
much value in working with others headed in the same
direction as you. It allows for contributions and
opinions to circulate and ideas to grow.
ELEMENT #2: EXECUTION

More than anything else, the PrimeSystem is designed to

accelerate the path to your proven strategy. This is so
that you can execute a perfectly balanced and proven
strategy as soon as possible.

This topic has four steps:

• Plan – Take the strategy and develop the tactics,

which will accomplish the desired effect.
• Execute – Get out and use the tools provided.
• Journal - Track what went your way and what did
not.
• Optimize - Analyze your journal and search for
important optimization
You're planning how to win again and again using the
benefit of all the data gathered thus far. This is a
continuous process, which keeps going over and over
again, week by week as you collect more and more data.
"This is the heart of the PrimeSystem. This is how you
always have an advantage compared to other market
participants who do not act according to that.

In this element, objectives must be:

• Clear
• Measurable
• Achievable
• Specified down to the finest detail
• Flexible – so they can be adapted to changing
conditions
PLAN

Before you expect anything worthwhile to be achieved,

you have to sit down and plan things out thoroughly. It
will allow you to anticipate what will happen as you
attempt to execute and put in place the assets you will
require. Ideally, this will allow you to be 100%
prepared for events way before they even occur. And if
they don't occur at least, you have been prepared. It
just means that you can avoid big surprises and empower
yourself to trade with a high level of confidence.
That, in turn, means that you will be able to adjust
your action to any market behaviour. The whole point is
to be able to adapt to the market and trade what the
market gives you, not what you want the market to do.

Planning effectively also requires that you set

achievable and realistic tasks. If what you ask for is
impossible even with stretching and doing everything
conceivable, you degrade your motivation, abilities,
energy and enthusiasm. And most of the time traders
don't even know what is achievable with the compound
interest effect. You want yourself to be determined
about winning in the long term, and that will only
happen if you have clear, measurable and achievable
objectives, which clearly integrate with the bigger
picture.

In order to plan thoroughly, there are six steps, which

are essential to recognize:

• Specify your trading objective – in razor-sharp

detail. Your trading objective will be something
you can go out and do today rather than a future
goal. It has to be clear, quantifiable, achievable
and aligned with the future picture.

• Identify all potential threats to achievement – all

the internal and external barriers that may stand
between you and your objective. Your most apparent
external threat will be you. Sounds weird but it is
 true. People sabotage themselves all the time, but
there may also be numerous indirect influences. Get
to know your weaknesses and accept them. Work your
way around. Watch out for complacency, indifference
or apathy in your organization as well as the
impending arrival of disruptive technologies. Make
it your business to be well informed about anything
and everything. Prioritize your threats and have
some ideas on how to deal with them.

• Catalogue your available resources – know in detail

what personal support you have available to use.
This will usually be skills, money, systems,
technologies, experience, time and so forth. Get to
know yourself even more. Because this is what
trading is: getting to know yourself. Be aware of
your thoughts and know the ins and outs of your
mind. If at all possible, try matching each of your
potential threats with a resource, which will
negate or at least offset the threat's impact. Get
to know the market and watch it close.
• Tap into the experiences of others in trading who
have been in similar situations – and see whether
they have some useful tips you should be using.
Most of the time, this is not the case, at least
not on social media. So that is what I'm for here.
This may be something as simple as advising you to
never use more than 2% risk. Or it may be something
like never execute a trade before the market close
on a Friday. Search out the practical lessons other
people have already learned and take advantage of
this kind of information. Or in other words: Read
every sentence very close and try to think what I
want you to think. And consider.

• Develop a strategy of potential courses of action.

So you can respond to conditions as they unfold
intelligently. Try and get the best knowledge/
ideas/plans, not just those people who are
outspoken. Have them look at your project
logically, and think what could beat you. Test it
and analyze again what happened. It will uncover
weaknesses that you didn't even realize existed,
and you only optimize what has a gap, not something
 that is possibly working. Without a plan/journal/
post analysis, you can't know what tactics are
working and what is not. But with a system, you can
then address these issues before they become
critical.

• Plan for contingencies – or in other words, inject

some flexibility into your planning. Assume things
will go wrong when you try to execute. Ask all the
problematic "What if?" questions. And go by the
approach of IF and THEN. "IF this happens THEN I'm
going to do this." Brainstorm how you will respond
now before the pressure comes on. Think things
through in advance so if that situation arises when
you're trying to execute, you can respond
immediately and positively. Consider what would
happen if a highly unlikely sequence of events
actually occurred and plan accordingly. Develop a
scripted contingency plan so you can respond
quickly. Be realistic and recognize bad things can
happen at any time, and it's up to you to have
thought things through in advance.
EXECUTE

Many smart business men already have found out that the
biggest stumbling block to productive execution is task
saturation – having too much to do and not enough time,
resources or tools. In this era of layoffs and other
structural changes, many people wear task saturation
almost as if it were a badge of honour.
The three general responses to task saturation are:

• Shut down, stop working and take a break.

• Start making and rewriting lists rather than doing
things.
• Become intensely focused on just one thing and
ignore all else.

All three of these responses are potential problems for

your routine. A better approach is to build into your
business the three processes traders use to keep
themselves on track and focused:

A trader, regardless if they are a scalper or swing

trader must develop some checklists, even if they are
just repetitive business-as-usual items. Just going
through a checklist and making sure you haven't missed
out anything obvious. This lowers stress and increases
your ability to execute. Find your trading choke points
and build in some checklists to help yourself go to
through that.
Secondly having some crosschecks is essential, meaning,
keep a close eye on your numbers. Get information on
how your trades are doing and then relate that
information to your overall goal to create aligned
capital growth.

Search for mutual support by joining a community or

getting a buddy system in place where you can have a
person that is a mentor or partner who can assist. Have
a checklist everyone uses to stay on point.

Journal

This is a technique, which is popular but rarely done

right. The essence of a debrief is to evaluate what
went right and what went wrong so the next time the
same project is executed, the organization can do it
better. A debrief is all about improving skills and
getting better rather than who was right and who was
wrong. In the PrimeSystem model, journaling is the most
crucial step of all. It's even more important than the
execution step because it is the catalyst to the
learning process and the foundation for future
optimization, which will create a proven strategy.

A good journal requires smart key facts, which can give

you a reliable result. Defuse your ego and learn how to
be self-aware of the things you do. It can be hard, but
it will be something you have to learn. You must leave
your ego before entering into the charts. This will
remove any bias or unrealistic confidence you have.
Remember, your job is to trade what is given to you,
not what you feel you want to happen.
A useful journal will contain various elements.
Therefore it is important to mention one of the most
important aspects of a trading journal:

Make sure that the journaling process happens either

directly after the trade was closed or after a trading
week on the weekend when the information is still
fresh.

There are many subtopics to this, and many questions

one must ask during the trading process. Was the target
set beforehand? Was it too easy to reach? You must
always be pushing to reach new targets within your
trading but being realistic at the same time. If you
notice that you are continually hitting your target,
write down new goals and new objectives. Errors will
happen. But with errors or failures, you will become a
more refined trader. Ask yourself: How can you avoid
the errors you made? Were those errors made because of
your psychology or lack of backtesting? What can you do
differently, and what data do you require to evaluate
that result? Basically what you should care about is
what did you do right and wrong and how can you improve
on that. Analyze the data and find the root cause for
everything that went wrong. The root cause will always
a big, systemic item rather than a small error of
judgment. The root cause will most often be a problem
of:

• The approach of trading was not fully understood

• A chain of events
• No real intention of succeeding
• Misunderstandings
• Lack of discipline
Look for patterns in the root causes, step back and
find those, which have cropped up again and again. If
there is one cause common to several problems, you then
come up with a viable fix. Lesson learned. If this
lesson is then disseminated, future issues can be
avoided. The lesson learned could be turned into a new
process, which, when implemented, helps you're trading
become more consistent.

The learned lessons can also be picked up on by others

and acted upon quickly and decisively. None of this
happens just by accident but by doing out journaling
and post-analysis. This is something that you have to
do. I'm trying to highlight it here in this case
massively.
Many traders choose not to journal, and that is why
many, in the long run, will end up failing. If you
don't have any objective rules to follow or no system
in place, you fail to plan. Therefore you are planning
to fail. For example, a big part of trading is
basically about managing your emotions well, and that
is why I always highlight trading psychology here as
well. Because it is normal for the unskilled person to
fail, and you probably tend to make bad decisions
during moments of top emotional peaks. Think about
stressful situations or the number one reason people
fail in business. They are untrained, and 99% of all
people would fail in these kinds of a situation if they
are untrained. Setbacks are normal, and so are losses
in trading, and they should not be seen as something
negative as they are the stepping-stones to winning as
part of the overall system. That's why we can be
confident, and we do not need to be anxious about
executing our plan. Therefore, we reduce emotionally
triggered bad decisions greatly. We know what we are
risking, and we know what we are targeting for, and we
know it's all about odds and consistency.
ELEMENT #3: FOUNDATION

No execution plan is ever perfect when it is first

conceived. When an execution plan breaks down or has to
be adapted due to changing market conditions, you have
to rely on the three basic elements, which form the
foundation of the PrimeSystem:

•Standards – Your implicit and explicit

organizational expectations of what is acceptable
and what's not. What have you got in place, which
defines your trading style?
• Training – Which is ongoing and consistent with
meeting the demands of a fast-changing world. How
are you preparing yourself to meet the requirements
of the market and the fast-moving aspect of it?
• People – Getting the right people involved in the
organization in the first place. Concerning
trading, this can mean ensuring you are the right
candidate for the job and fulfilling what it means
to be a trader.
In effect, your foundation is your ultimate contingency
plan. If your execution fails, you can count on your
foundation elements to keep your organization working
until the problems are fixed.

When your execution plans fail or whenever unusual

circumstances arise, your organization and yourself
need standards to fall back on. Standards specify the
minimum level of competency and professionalism
required in all parts of your trading. When you set
standards you're creating a situation of discipline,
which will benefit your trading in the long term.
Higher standards are always better than low standards
in this case. Easy to understand but hard for 90% to
adapt to it.

Training is essential to perfect execution. Many

traders think they're too busy to spend any time
training. That's a fallacy. Military organizations find
time to train and rehearse even in the middle of
combat, and traders need to do the same. War is never
won or lost in one mission or one battle but is the
cumulative result of a sustained campaign. If you
aren't continually learning and grafting new insights
into what you're doing, you're not going to get better.

If you're in business to win, you have to train

regularly. Change your mindset a little. The training
is arguably the essential aspect when it comes to the
business of trading. There is nothing more crucial than
ensuring that you have what it takes to enter the
market. Do you have the experience needed and the
mental edge to go ahead and execute a trade? This is
going to be different with different people, and you
must do a self-assessment.

You won't win in the twenty-first century by merely

reacting to change or making incremental improvements
to maintain your current position. To win, you must
decide what you want your tomorrow to be, and then make
it happen faster than the rate of change in your
competitive environment. Professional sports teams
don't rely on last year's training for this year's
results. Instead, every year they go back to boot camp
and train at the basics until they become second
nature. Keep researching. What are other strategies you
could integrate into your system? What can you do to
optimize your results? These are basic questions you
must keep asking yourself.

A great-accelerated training program will involve three

key steps:

• Desired learning objectives. Practical training

starts by answering the question: "What will I be
learning today?" And training is never casual, or
ad hoc but it is structured with a clear,
measurable and achievable objective.
• Demo/Do. Great training is always hands-on and
interactive. You see someone do what's required
(the demo) and then you have a chance to do it
yourself. This demo/do cycle is repeated again and
 again until you can perform it confidently
yourself. This is the only way people can master
the new skills required. Set up a demo account and
ensure consistency before taking that leap into
live accounts. Is your strategy working, do you
know what you are doing and is the mental side
strong. One must be able to let a winning trade run
and cut a losing trade short. The mental side of
trading is often ignored but it's actually the most
important aspect when it comes to trading.
• Continuation training. Regular training must
continue. This is the opportunity to stay fresh and
current with the essential skills required. It's
the equivalent of going back to boot camp once a
year and practising the basics. Continuation
training is an opportunity to fine-tune basic
skills and competencies. It is a chance to go back
to basics and renew your goals and intentions
within your trading.

Perfect execution operates very effectively at an

individual level. You can use it to set out your life
goals and identify your personal centres of gravity.
You can then develop the execution in cyclyes around
your daily responsibilities. It is important to
understand how certain factors affect your trading. By
debriefing regularly, you can accelerate your progress
towards achieving. In your own life, you will usually
have several different execution cycles operating at
the same time:

• A physical fitness and workout cycle to maintain

your fitness and build long-term health
•A personal knowledge cycle by which you are
attempting to learn more and get better at
everything you do
• A corporate cycle embracing everything you do to
earn an income
•A personal finance cycle by which you and your
spouse are working towards long-term financial
goals.
• Quality of life cycle embracing your family
relationships
• Other personal interests
All of these cycles have to mesh together and be woven
into your life in order for you to feel good. The
execution process can be used in all these areas with
equal relevance and applicability. Once you manage to
find the balance of all these different elements, you
will see your trading begin to thrive.