Contents
Overview................................................................................................................ 3
Warning (The Information Gatherer).......................................................................... 4
WIIFM (What’s in it for me?).................................................................................... 6
How to make a Small Fortune (VERY QUICKLY)............................................................ 7
The Big “Secret”..................................................................................................... 8
Eating an Elephant!................................................................................................ 10
The Reason Most Traders Fail.................................................................................. 15
S.W.O.T................................................................................................................. 18
The Passion.... (Playing the Game)........................................................................... 20
What’s your Goal?.................................................................................................. 23
The Method........................................................................................................... 24
Summary.............................................................................................................. 25
Conclusion............................................................................................................ 26
Previous Clients..................................................................................................... 28
About The Author................................................................................................... 30


 Overview
Within this report I intend to expose the profession of trading to you. You may be one
of the numerous hedge fund managers, professional traders, finance professionals
or market amateurs I have had the opportunity and pleasure of training. On the other-
hand you might never have heard about me.

Regardless of your background, within the next few pages I intend to share informa-
tion, which will be pertinent to your future success in trading in the financial markets.
There will be ample time to find out more about me, if you are interested enough to
know.

I want to provide you with crystal clear guidance on the life of the trader outlining ex-
actly what it is we do and why. I also aim to communicate the ups, downs and pitfalls
of the life we face daily. In addition to this, I also intend to share my successes as
well as my failures to illustrate scenarios that are readily experienced in the turbulent
world of financial markets trading.

The reasons for my actions and my decision to put this down on paper are many fold
and will become clearer as you read on. Suffice to say you will be given a clear idea
of what you will need to move forward and take your trading to a much more profit-
able level.

The reverse effect of this report is to provide you with enough information to help
you to decide whether or not to trade. However, in order to do this, you need to be
accurately armed with the right information of what is involved without the barrage of
sales pitches that one usually has to weave through to get access to a genuine and
unbiased view of trading.

Finally, on reading through this report, if trading is not for you, I will explore avenues
enabling you to still capitalise on the opportunities afforded by trading, without you
personally having to trade.


 Warning
(The Information Gatherer)
Do not put this report off to read at some later date.
There is no better time than now!
In the fast pace of today’s information age, everybody obtains reports, e-books, Vid-
eos, MP3s, pod casts, etc to read, download, listen to, play back, etc in their spare
time.

To cope with this ever-increasing information explosion, we have devised new and
clever means of “coping”. The inevitable “Right mouse click “-> Save as -> with the
good intention of “Coming Back” to it, is a common behaviour in popular culture. The
unfortunate thing however is that we never seem to be able to come back to our back-
log of stored information.

Usually in less than 5 minutes after saving the document, we are immediately onto
the next piece of information, in search of the ever-elusive secret key that will guaran-
tee long-term happiness or success.

I am willing to hazard a guess that on your computer, there are anywhere between
5 - 50 articles that you have downloaded with these good intentions, but never got
round to reading.

There is no intrinsic problem with such intentions, except for the fact that they seldom
if ever, give the results one so desperately desires. There is an old saying, which goes
“The Road to Hell is paved with Good Intentions.”

As “proof of fact”, run a quick mental check of the E-books, reports and articles, which
you have downloaded, still waiting to be read.

An honest assessment of the status of things will quickly show you that like several
other people in society today, you are more likely to be suffering from information
overload, rather than the lack of information, which used to be the case a few short
years ago.


As a consequence of this overload, we often become overwhelmed preventing us
from being able to take action. This is due to the inability to process the barrage of
information being thrown at us.

If you are suffering from this problem, I urgently advise you to print a copy of this re-
port, grab your lunch break and sit free for at least thirty minutes and in return,

I GUARANTEE THAT THE INFORMATION WILL BE WORTH

ITS WEIGHT IN GOLD.
I will go over things that will save you a lot of time and effort and help you to avoid
sales gimmicks of every nature, so ensure that you read this now.

All I ask for in return is a few minutes of your time, in order to communicate my trading
insights, and to give you specific answers to questions you may have been looking
for.


 WIIFM (What’s in it for me?)
In this section, I will attempt to enumerate every single thing I plan to share with
you.

There are a few ground rules which were set for this report, and it is important I ex-
plain them now.

YOU ARE THE REASON I HAVE WRITTEN THIS DOCUMENT.

I will show you how to think about the markets, by delving into what it takes to be a
successful trader, and in the process equip you with the very same methodology and
mindset, that I use to trade daily.

There are no hyped up results here, no cleverly worded gimmicks, no special prod-
ucts etc. So what exactly are we going to be going over?

1 The BIG SECRET nobody will tell you

2 The single question you need to ask yourself before you commit your funds to
any trading activity
3 How all of your good intentions might actually do more harm than good
4 The exact blueprint for accumulating wealth
5 The specific techniques I use to trade
6 The Secret to acquiring great wealth
7 Money management rules and why they are important
8 What type of software you need
9 How to make a small fortune very quickly (Not what you may think)
10 Learning to deal with the stress of trading

As a special thank-you for taking the time to read through the entire report, I will re-
veal a brand new concept that will clarify a lot of issues you may currently be dealing
with. More so, it will show you how to quickly and radically leverage your efforts within
the markets.

There is much more that I can share with you on this topic, however for the time be-
ing, let’s move onto the next section.


 How to make a Small Fortune
(VERY QUICKLY)
If you are like the hundreds of clients I have previously trained, the question “How do
I make a fortune” is probably one you have burning in your mind, one to which you
would like a straight no BS answer to. The usual underlying assumption being, “tell
me, so I can go out and, Do it! “.

I would love to give you an answer as straight as a sped arrow, so I will do it in the
form of an old market makers joke which goes as follows;

Question: How do you make a small fortune very quickly?

Answer: Start with a large one, and trade your way down! (An answer far
straighter than most are willing to accept)

Note: For those who do not know, the Market Maker is the fellow or institution
who quotes the prices at which one buys and sells in the Stock Markets. They
also control something called the order book, which details the levels at which
market participants intend to buy or sell and how much of each product.

The essence of this joke is to help nip in the bud the type of thinking that several
people come into the markets with. This type of thinking approaches the markets with
a very amateurish mindset, forgetting that they are going to be playing the “game”
against highly trained professionals and institutions with much deeper pockets. (This
threat, will be discussed in more detail later on)
It is this same opportunistic thinking which allows several people to get suckered out
of their money by the lure of the markets, by tales of great wealth made by others in
the seemingly short space of time. The vision of living on easy street, driving flash
Lamborghinis, sipping fine champagne and eating caviar usually pays testament to
the egotistical opportunist.

Regardless of whether or not the underlying desires are the same, the actual thought
processes leading them to the markets remain the same.

The fact remains that most people tend to look at trading in the financial markets as
a way out of the proverbial rat race. One in which they can suddenly make quick
wealth with very little, if any investment in time, effort and in some cases mon-
ey.
In holding this opinion, they cannot be further away from the truth, and very quickly
find themselves out of pocket and thoroughly disillusioned.

A cursory look at the adverts to do with trading, brokers, training providers, soft-
ware vendors etc ALL MARKET TO THE SAME BASE EMOTION - EASY STREET
GREED! Each one offers one system after the other; with results so amazing, it is
easy to be fooled into believing them. So, right here and now, I will share with you the
ABSOLUTE SECRET YOU NEED TO KNOW TO SUCCEED IN TRADING IN THE
FINANCIAL MARKETS


 The Big “Secret”
There is a THREE PRONGED secret to trading and making a lot of money in the mar-
kets over the long-term. I call it the TRADER’S TRINITY. When thoroughly grasped
and understood, it will significantly add to your bottom line.

The secret is something you should write out on a small card, and keep with you at
all times. Review it regularly until it gets thoroughly ingrained in your sub-conscious
mind by reading it at the start of your trading day. It goes as follows:

Trading success is obtained by diligent and concerted action. Repeatedly carrying

out actions, which have a statistically positive expectancy, and constantly monitoring
the results obtained, for deviations in this expectancy.

Secondly, clearly understanding that a positive expectancy does not intrinsically im-
ply certainty i.e an event where the probability is one. The trader must allow the rules
of proper money management to keep him/her in the game, long enough to allow the
mathematical principles of time and compounding to take their natural course.

Finally, leverage must be judiciously applied, with an acute awareness of the pos-
sibility of black swans. Otherwise the trader will have no real chance of making it into
the big leagues where they will have more opportunities to trade significantly bigger
sizes, different markets and different products.

“This principle above is really important and deserves you spending a few min-
utes to closely study.”

The reverse side of this trinity quickly reveals the following to you.
TRADING SUCCESS IS NOT DEPENDENT ON ANY SPECIAL SOFTWARE (Though
you may discover you need software to work with.) It is also not dependent on any
“special course” (Though you might need some training for the specifics of what you
plan to trade),

Below is a list of some of the other things which are often marketed as what you ab-
solutely need to succeed, which the trinity, clearly stated, helps to dispel.

You may want to add your own observations to the list below
Specialised hardware,
Closeness to the Exchange
Speed of Execution,
Special Trading System,
Yet another trading book
Or any other such gimmicks that may currently be on offer

Though all of these things may increase an Already Developed EDGE.

Did you get all of that? If you did, BRAVO! If not, please read it again.


I am hoping it raises a lot of questions in you. Questions such as:

What specific actions should I take next?

What is a positive expectancy?
What is proper money management?
Is there really a role for Software?
What course if any, should I take?
How do I develop consistency?
How can I learn about determining if a method has a positive expectancy?
How can I monitor deviations of the system?
How do I even determine what actions to take before even considering doing them
diligently?
What the hell are Black Swans?
How do I determine which amount of leverage is judicious?
Where do issues like liquidity, timing, scaling, market depth and any other such terms
you may have heard of, that fit into this trinity?
If consistency is so important can I automate this? If so, how do I achieve this?
Would it be the correct thing to actually automate this?
If it is all automated what do I do then?

Get the overall picture?

With the trader’s trinity clearly stated as the way to succeed in the markets, you may
assume that several traders are making a huge fortune. Unfortunately the fact is that,
this is not the case and a quite often cited statistic goes that; 90% of all traders lose
money overall.

The point I am making is that, in order to discover the answers to all of these ques-
tions above, several people lose sight of the essence of the secret to trading success
and the opportunity afforded by trading correctly.

They start with good intentions, discover their despair and in trying to remedy the loss
of clarity, in terms of what to do and how to proceed, end up digging a deeper financial
hole by being stuck in the trap of seeking out more and more information, courses,
systems books, software etc.

The “TRADER’S TRINITY” can be referred to as META STATEMENTS. In other words,

they are very broad statements, which should serve as some kind of homing beacon
to all key trading actions.

Reflecting on these META statements before trading should serve as a kind of

anchoring mechanism to the appropriate actions you need to engage in.

By delving deeper into the meanings and applications of the Meta Statements, you
are better able to keep focused on the goal you are trying to achieve, and each time
you feel lost, overwhelmed, fatigued, confused over yet another offer, etc, the META
statements should help you to remove the wool from your eyes and the cotton from
your brains.

I use the META STATEMENTS regularly, and strongly recommend you do the same.


 Eating an Elephant!
A closer look at the Trinity

How do you eat an Elephant?

One bite at a time, one day at a time.

However the stated goal here is very clear, eating the Elephant.

Unfortunately though, in the case of trading, the goal often gets muddled up and
some lose sight of what is being fought for or indeed how to fight the battle.

The Trader’s Trinity (The elusive Grail) as I have stated it above raises many other
issues which are also quite varied. The complexity and labyrinth of these issues when
actually considered, often perplexes traders and makes what is seemingly a very
simple buy/sell decision, a much more complex one.

In other words, the task of learning how to trade correctly is similar to eating an el-
ephant. There really are a whole bunch of things to learn, which fit into the framework
of the Trader’s Trinity, and it is important to take one step at a time in a clearly di-
rected path, so that you are able to appreciate and master the craft.

Regardless of the product, the style or the timeframe in which one intends to trade,
the trader’s trinity ALWAYS plays a very relevant role in the trader’s success.

A closer inspection of the trinity will show that there are three central aspects to it.

The first requires a clear understanding of mathematical expectation, what is

sometimes loosely referred to as having an “Edge”. The second aspect of the
trinity deals with, Principles of money management, and the third aspect addresses
the judicious and efficient use of leverage.

A rapid-fire executive summary of these three points is as shown below.

10
 Mathematical Expectation

Given a certain number of events which have probabilities of occurrences assigned

to them, and assuming a certain payoff is assigned per event, the sum of all the prod-
ucts of probabilities and payoffs, is referred to as the EXPECTATION.

Given a fair coin toss (Fair to imply the coin is NOT been tossed by Tricky Joe!),
where two possible events can occur, heads or tails, the probability of the coin coming
up either heads or tails is 50%

Consequently, if we pay each other $5.00 each time the other is right (You betting on
heads, and I betting on tails) the expectation of this game for either of us is exactly
ZERO. In other words, neither of us would win any money from the other over the long
run. From coin toss to coin toss, money would change hands, but the game remains
balanced. The calculation for expectation is shown below:

Expectation = Amount Won * Probability + (-Amount Lost) * Probability

Expectation = 5 *0.5 + (-5) * 0.5

Expectation = 0.

Now if we assume that the coin is Tricky Joes, and that by some means unbeknownst
to us, he is able to get the coin to come up more heads than tails, indicated by the
probabilities that follow; (With Joe betting on Heads)

Heads = 55%
Tails = 45%

Our new expectation is simply;

Expectation = 5 *0.45 + (-5) * 0.55

Expectation = -0.5
Therefore if you persist in playing this game with tricky Joe, disregarding the well-
intentioned pleas of our loved ones to stay off the streets and keep away from such
unscrupulous characters as tricky Joe, over the long-term you are likely to lose the
game. True, you may win from time to time, but statistically, a game this biased is
likely to eventually pan out in favour of the one who the mathematical expectation
supports.

11
 Time used here involves allowing the long-term effect of statistics to play out.
Combined with compounding where your proceeds are re-invested, the magic of time
contributes to the accumulation of great wealth.

Money Management

In ALL the games in casinos, the House has

a positive expectation, however minute, and
in some games e.g black jack the house on a
specifically dealt hand, may not have the Edge)

Expectation really adds up when we factor

in time and compounding into the equation.

Everybody has heard of money management in one form or the other. As kids when
your parents gave you money and told you to spend it wisely, they were alluding to
some measure of money management. Teenagers go through the same advice in
terms of gadgets they buy; adults do the same in terms of their salary and budget.
University undergraduates also have to be aware of the importance of money man-
agement. Consequently, most amateurs and even some professionals enter into
the financial -markets assuming they know what money management is and conse-
quently underestimate the vital importance of this aspect of the trinity.

To show just how far removed from the markets, this know it all opinion is, and yet to
illustrate its importance. Below I have listed a few of the techniques several profes-
sionals, professors and studies have considered. In trying to answer the following
Money Management related questions:

Firstly, “How much of a product, given a certain account size should I buy?”

Secondly, “When I experience a loss what do I do next?”

Thirdly, “What if it is cheaper now, than it was two weeks prior should I buy more,
clearly representing a saving?”

A few of the techniques market professionals have attempt-

The idea is that by buy-
ed to utilise are things such as Ralph Vince’s’ Optimal F, The
ing more as the price
Kelly formula, The Martingales Formula and several others.
falls, the average price
Each of these techniques have certain merits and demerits,
you started buying at
but the crucial thing you need to know is that money man-
is reduced, represent-
agement is both defensive and offensive. You need to Trade
ing a saving IF the price
bigger as your account grows, and you need to radically
moves back up. How-
reduce your trading size rapidly as you lose money. This is
ever that is really a big IF
NOT NEGOTIABLE.

There is a school of thought that teaches a concept called AVERAGING DOWN (Buy-
ing or selling more when the price moves adversely against you forcing your aver-
age entry price down). However, be warned as this method is the one that brought

12
Baring’s to its “knees” by Nick Leeson. Rather than accepting a small loss, he added
to his positions, compounding his losses even further.

Others teach you to keep DOUBLING UP with the “certainty” that WHEN the markets
turn you still make a profit. This clearly VIOLATES the second aspect of the TRINITY,
which addresses the concept of certainty, within probability.

AVERAGING UP (The opposite of Averaging down) and increasing scale when the
markets prove your analysis right, is something that is definitely encouraged as it is
the equivalence of REWARDING EFFICIENT WORKERS WITH A BONUS.

Judicious use of Leverage

The last aspect of the trinity is the judicious use of leverage, which utilises the age-
old concept of wealth building known as using OPM (Other peoples Money). Most
wealthy people obtain their riches by not only investing through only their own finan-
cial means. The likes of Donald Trump used this concept to great extent to build his
property empire.

The concept of leverage is to use the “little” you have to control an asset that
is of much higher value than you actually have.

To understand how it works. Assume you have two investors; Levi who uses lever-
age, and Jack who does not.

They both have $10,000 to invest.

Jack spends his $10,000 on a $10,000 investment that rises by 10%. From $10,000
to $11000, Jack consequently makes $1000.

Levi on the other hand understands using OPM and decides to “control” an asset
worth $100,000. If, just like Jack, you assume his investment goes up by 10% as well
from $100,000 to $110000. Consequently he makes $10,000. This is the awesome
power of using leverage.

However it is important to be aware that this formidable tool has led to the downfall
of several institutions, private traders and banks.
To understand why this is the case if you assume that both Jack and Levi’s invest-

13
 ment has dropped 10% rather than risen by 10%, Levi would be completely WIPED
OUT. He would lose his entire $10000 investment stake, while Jack would live to fight
another day with his $9000 left over.

There is a sweet spot, which exists between trading like Jack (No Leverage) and
trading like Levi (Too much Leverage), and I wish the answer was a simple one. Un-
fortunately the answer is slightly trickier. The correct answer to the question of “HOW
MUCH LEVERAGE” depends on a whole bunch of things.

This includes factors such as risk tolerance, volatility of the specific product you are
trading, size of the entire equity at hand, risk normalisation parameters, etc.

Even banks have entire departments, (Risk Management and Control) dedicated to
monitoring and keeping traders on the right side of leverage. The bulk of their time
is spent trying to predict and mitigate the negative effect of the occurrence of Black
Swans. Black Swans are events that are totally un-expected, carry in their wake an
extreme impact, but yet we try to explain it away after the fact. For this definition of
Black Swans, I have borrowed from Naseem Talebs fantastic book on the subject
“The Black Swan” and the more advanced readers of this report, may want to include
this book, in their must read section.

However, for the purpose of this report, the main warning I will give you, is that le-
verage is a double edged sword. It cuts both ways and can leave a lot of harm in its
wake, when placed in the wrong hands, or utilised incorrectly.

The availability of leverage facilities within the markets is not a ticket to make fool-
hardy assumptions about what is and what is not possible in the movements that the
market can generate given a unique set of random events.

Having considered the Trinity in closer detail, the question now remains, is it possible
for you to still fail once you have learnt and understood the trader’s secret? The an-
swer is a resounding yes. For those who already understand and consciously attempt
to apply the META statements and still find themselves struggling, below I have illus-
trated the reason why most traders still fail.

14
The Reason Most Traders Fail
(Even after grasping the Traders Trinity)
Very early on in my trading one of my mentors Eric taught me something I will never
forget. What he said to me, will be shared with you in the next few sentences.

I guess I paid significant attention to what Eric said, because in the three years in
which I had known him, he had made cumulative profits of over 23 million USD!

I also observed him closely with respect to how he behaved, during trading hours,
after trading hours, when he made a loss, when he took a gain, and how he analysed
markets, etc. I could not think of anybody better to pick his brain and learn from, than
him. The conversation led to several other similar conversations in which he very
generously showed me fallacies in consensus thinking and conformist opinions. This
discovery led me down a very different route than that which is often travelled by most
traders.

Do you treat your trading as a business???

Eric had quickly realised that though I thoroughly understood trading, financial prod-
ucts, markets etc. and that he could see that I also had a firm grasp of the trinity
(By the way, understanding, not necessarily applying the trinity is what makes most
professionals feel separate from the amateurs) he had patiently waited to drop his
bombshell on me!

The question made me immediately understand what I had to do and the rest as they
say is history.
NOT TREATING TRADING AS A BUSINESS
IS A FATAL MISTAKE

Each time traders are told to treat trading as a business, it is often with respect to
instructing the trader to do one or more of the following;

a) Develop discipline with respect to their trading actions; (For the record, no
mention is made of exactly HOW to develop discipline. See the second Scroll,
“Mastering the Traders Mind”)
b) Learn to accept losses as a business expense, and finally,
c) To freely purchase software, training courses, e-books, etc as they can be writ
ten off as legitimate business expenses

The insanity of this definition comes to light when we draw an analogy to a real
company such as Nike, defining their business simply as .......

* Lets make sure we have discipline in creating our products,

* Understand lost revenues as business expenses, with no real effort to mitigate
these losses,
* Who cares, let’s rack up our business expenses, since we can write them off as
legitimate business expenses anyway!

Of course as soon as this is clearly illustrated we immediately see the folly of this
type of thinking.

15
 To trade successfully you must first understand clearly what it means to treat your
trading as a business, then go on to develop a plan of action based off this under-
standing derived, and finally go on to IMPLEMENT this plan, with provisions for
regular revisions to the plan.

In essence I am saying it is not enough to only be aware of the Traders Trinity, but to
also know how to implement it in the same manner as a business such as Nike, or
Microsoft would.

Before beginning to trade, a plan of action MUST be created (This would be equiva-
lent to developing a business plan). During the mentoring I do with my clients, this is
one of the most useful exercises I carry out with them. The development of a concept
that I have labelled, as the traders blueprint is a very unique aspect to what we do
at TwoScrolls.com. It encompasses a very effective and uniquely tailored program
built to the client’s requirements, which applies in-depth knowledge of the markets,
psychology and NLP. You will learn a little more about this later.

A SWOT (Strengths, Weakness, Opportunities and Threats) analysis must be carried

out.

As stated earlier, most people start off with a real slant towards the opportunistic
thought of trading, without a clear understanding of the other aspects of this type of
detailed analysis.

After commencing trading, they then begin trying to develop strengths and are often
not even aware of the underlying threats to themselves or their trading business.
In the table below, I have highlighted a few of the similarities between running a com-
pany and trading, that traders must be concerned with:
Companies Traders

Product Creation Develop and bring to Investigating the availability of new

Companies
market new products Tradersand incorporating them into
products,
their current trading regime.

Product Creation Develop and bring to Investigating the availability of new

market new are
Companies products products,would
Traders and incorporating
be looking to them into
develop
Market Dominance their current trading
interested in developing further strategies, to regime.
mitigate risks via
their brand awareness, diversification across product classes and
establishing deeper strategies.
Market Dominance Companies are Traders would be looking to develop
market reaches
interested in developing further strategies, to mitigate risks via
their brand awareness, diversification across product classes and
establishing deeper
Good companies DO strategies.
Most traders on the other hand,
Behaviour in market reaches new
NOT often-initiate immediately start researching new
Negative Economic product launches when methods when the strategy they “know”
Cycles they are doing badly; or thought they knew seems to be failing
Behaviour in Good companies DO Most traders on the other hand,
rather they carry out them, this is clearly a mistake, and
NOT often-initiate new immediately start researching new
Negative Economic cost cutting operations
product launches when
Experienced traders however KNOW
methods when the strategy they “know”
Cycles they are doing badly;
and UNDERSTAND the concept of a
or thought they knew seems to be failing
DRAWDOWN in their system, and tend
rather they carry out them, this is clearly a mistake, and
to stick with it through its drawdown
cost cutting operations Experienced traders however KNOW
periods. They survive by the same
and UNDERSTAND the concept of a
mechanism companies do, strict money
DRAWDOWN in their system, and tend
management.
to stick with it through its drawdown
periods. They survive by the same
Companies also tend to mechanism
Traders, whocompanies
have the gooddo, strict money
fortune of
Growth and management.
have strategies in place becoming successful, also have to deal
Expansion for handling growth and with trading larger accounts and correctly
expansion utilising leverage at this scale. Be aware
Growth and Companies also tend to Traders, who have the good fortune of
that the properties for large accounts vary
have strategies in place becoming successful, also have to deal
Expansion for handling growth and
from that for smaller account sizes. A
with trading larger accounts and correctly
fundamental aspect of tailoring a trading
expansion utilising leverage at this scale. Be aware
program has to deal with determining the
that the properties for large accounts vary
equity at hand and tailoring the trading
from that for smaller account sizes. A
strategy to suit this account size as well.
fundamental aspect of tailoring a trading
program has to deal with determining the
Since most companies equity at hand
However, in theand
casetailoring
of the the trading
trader, the
Idiosyncratic
16 Risk (Emotion
tend to be larger strategy to suitofthis
whole burden thisaccount size mirrors
risk closely as well.
than one man, the if not EXACTLY MATCHES the trader
al and personal idiosyncratic risks himself. Consequently, it is of vital
Idiosyncratic Since most companies However, in the case of the trader, the
component) associated with one importance that the trader develops
tend to be larger whole burden of this risk closely mirrors
Risk (Emotion
 from that for smaller account sizes. A
fundamental aspect of tailoring a trading
program has to deal with determining the
equity at hand and tailoring the trading
strategy to suit this account size as well.

Idiosyncratic Since most companies However, in the case of the trader, the
tend to be larger whole burden of this risk closely mirrors
Risk (Emotion than one man, the if not EXACTLY MATCHES the trader
al and personal idiosyncratic risks himself. Consequently, it is of vital
component) associated with one importance that the trader develops
persons emotional techniques to be fully aware of the risks
state, is more evenly incorporated into his trading by virtue of
distributed around the his emotional frame of mind and learns
different members of a how to bring them in full congruence with
company. the direction of the trading account. This
is another aspect to which close attention
is paid during the development of a
tailored coaching program.

Accountability Companies particularly The trader who intends to do well should

public companies, incorporate some kind of reporting
have accountability, mechanism into their trading. A famous
predominantly to quote goes,
their shareholders,
consequently these “Performance improves, when
companies have to accountability is demanded.”
act in a manner that
strives to protect and So promise to report your figures to an
grow shareholder external person (Preferably one who
value. There is also looks up to you or a colleague – And do
accountability to be honest).
regulatory bodies ,
which demand these
institutions maintain a
sort of “prudent man
rule “ , the consequence
of this helps to reinforce
a positive type of
behavioural and fiscal
discipline.

14 “Performance improves, when accountability is demanded.”

There are several other aspects to running a company, which should be mirrored in
the thinking and the strategies of a trader. Traders who really want to move to the next
level in their trading should pay close attention to these parallels

Now that I have addressed one of the major reasons I believe most traders still fail,
I will now address one of the key tools that will help develop you into a successful
trader.

17
 S.W.O.T
(Strengths, Weaknesses, Opportunities, Threats)
As I am hoping you begin to discover, there are several things which a trader, profes-
sional or otherwise must consider before venturing into the world of trading, and here
I will very briefly show you what a S.W.O.T analysis is, and how carrying out such an
analysis can improve your trading education and consequently career.

A SWOT analysis is a detailed assessment of your Strengths, Weaknesses, Opportu-

nities and Threats. A proper analysis should help you identify several biases you may
currently have and also direct how you can move forward.

Below I have tried to indicate some elements you might want to consider whilst carry-
ing out a personal inventory of yourself and your trading business.

Not everyone will have ALL the strengths, or carry the burden of all the weaknesses
below, but as soon as you to look at the list, you will be better placed to understand
the risks presented to your account, by virtue of this analysis.

At the end of the lists, I have also directed you to a personality type test, which you
can do, to help with understanding yourself in closer detail.

SWOT elements:
Strengths Weaknesses

Personal Personal
Patient. Impatient
Dedicated. Complacent.
Hardworking. Lazy.
Consistent. Inconsistent
Meticulous. Haphazard.
Can think laterally. Myopic vision.
Ability to synthesize vast amounts of information. Gets confused in the face of vast amounts of data.
Good Handle on Emotions. Overly Attached.
Humble. Arrogant.
Thoughtful. Careless
Intelligent. Dim-witted.( Sorry , No softer way to put this)
Focused. Unfocused
Decisive. Indecisive.
Technical Technical
Good knowledge of various investment products/strategies. Weak knowledge of investment products/strategies.
Strong Macro Economic Understanding. No understanding of macro economic triggers.
Good knowledge of relevant data. Unaware of relevant and vital data.
Good knowledge of Software required No money management or only a basic awareness of money
Good knowledge of Various Money Management Rules. management rules.
Clear understanding of risk factors. Fails to cater to risk.
Good understanding of Capitalisation issues and is properly Inadequately capitalised.
capitalised for the products you intend to trade. No technical knowledge of the quantitative aspect of trading
Understanding of required maths, probability theory and is hence cannot develop or implement a trading system.
able to take decisions in the face of uncertainty No knowledge of required software

And Several others… And several others…

Threats Opportunities
Personal Personal
18 Large Financial constraints. Self Improvement
Unexpected expenses. Potential Financial benefit
Illness. Personal Financial freedom.
 Good understanding of Capitalisation issues and is properly Inadequately capitalised.
capitalised for the products you intend to trade. No technical knowledge of the quantitative aspect of trading
Understanding of required maths, probability theory and is hence cannot develop or implement a trading system.
able to take decisions in the face of uncertainty No knowledge of required software

And Several others… And several others…

Threats Opportunities
Personal Personal
Large Financial constraints. Self Improvement
Unexpected expenses. Potential Financial benefit
Illness. Personal Financial freedom.
Unsupportive spouse, family or friends.
External Distractions.
Technical
Technical
Borderless trading opportunities.
Possibility of being wiped out or persistently long Near Infinite amounts of products to trade.
drawdown in the trading system. Ready availability of data.
Degradation or downright failure of trading system. Tremendous amounts of information on systems,
Autocorrelation across diversified position. methods, courses, etc.
Market Crashes. (Though correct trading should Ability to trade in highly regulated markets.
cater to these) Ability to trade from home.
“Black Swan” events. Low set-up costs,
Fictitious or Falsified data (Such as ENRON) Low barriers to entry.
Unscrupulous Brokers/Market Makers Availability of well developed markets, such that rel-
Stop Hunters. evant news is rapidly integrated into market prices.
Erratic Data.
System Crashes. And several others ……
Connectivity problems.
Overly large Slippage. Notice that an opportunity is NOT the ability to
Overly large fees. MAKE A LOT OF MONEY! Rather the potential of
Limit situations, where you are caught out on the what is actually possible
wrong side.
Bull/Bear Traps

These various lists above are by no means exhaustive, but their aim is to show you
16 the benefits of doing a detailed inventory of yourself.

It is only through a detailed inventory of your skills set of what you have and what you
don’t with respect to trading, are you be able to determine what is truly lacking and
consequently, what EXACTLY you require to begin or continue trading.

Several tests exist which allow you to run an inventory of your personality for the soft
skills required. One such test, which exists, is the Myers BRIGG’S test. For the techni-
cal skills and requirements however a bit more work has to be done.
In thinking and trying to acquire these technical skills several traders (or potential
wannabes) develop a complex path, which leads them further away from the goal
of becoming excellent traders. Later on in this report, I will be looking closely at the
Trader’s blueprint, and offering you an opportunity to discover your own map of the
markets.

19
 The Passion.... (Playing the Game)
Trading is a tough profession
I am probably one of the few people who will tell you this. The brokers will tout tales
of the last person who made $30,000 in one trade, and fail to tell you about the 2000
or so clients who cumulatively lost multiples of this amount.

The Software vendors will tell you how their specific system raked in hypothetic results
of 98 % winning trades, where the word “hypothetic” can be replaced with “IMAGI-
NARY” or “Fictitious”?

Trading arcades (Places that charge you a fee to trade using their systems and pro-
vide a buddy environment) tell you how easily you can make money, because of their
extremely CLOSE proximity to a specific exchange or the “Strength” of their trading
platform.

Newsletter sellers generate a series of trade ideas such that any monkey would have
also gotten a pass rate. They then go on to spout their recent gains with the claim of
superior knowledge of the markets, and why you should subscribe to their newslet-
ter.

The list goes on and on, from data providers who claim that their data would by de-
fault give you the best results, to training outfits which claim that their new technique
is the next best thing since sliced bread.

Some of these play to FEAR, whilst others play to GREED.

In light of this here are a series of three facts:

Fact One: NOBODY KNOWS THE FUTURE,

Fact two: NO SYSTEM, TECHNICAL OR OTHERWISE PREDICT IT.
Fact Three: NO COURSE CAN TEACH YOU HOW TO READ THE FUTURE.

So why should you keep playing a game in which you need to have an idea of how
future events pan out, when it is PAINFULLY OBVIOUS that the future will always
remain uncertain?

The true craft of trading is to be found in the following:

1) The evolving process of learning how to effectively understand and utilise the
laws of probability.
2) Striving to constantly stack these laws in your favour, as pertinent events occur;
3) Maintaining uniformity whilst trading across different product sets by normaliz-
ing these products for volatility.

Different products exhibit different swings in the markets, and your trading style should
not be affected by these swings, but should rather cater correctly to them.

20
4) Perfecting the craft, requires that you ensure you are taking appropriate position
sizes when you trade i.e. Risks which are proportional to a relatively small portion of
the entire account equity.

Correctly utilising diversification, which is trading products sufficiently uncorrelated

such that when a “Black Swan “occurs, the effects are not as devastating as they
could be.

Historically some extreme events have caused product sets which were theo-
retically uncorrelated to suddenly become highly correlated e.g The Russian
Govt bond default in 1998.

The passion of this game lies in the constant recall and application of the
rules of the trinity, whilst correctly translating and acting in accordance with
these probabilistic events.
By doing things this way, losses become exactly what they are, the correct
playing out of improperly translated events.

In other words, nobody is out to get you (Ok yes there are stop hunters and dubious
brokers/market makers). The universe is not gunning for you, and the markets do not
care specifically about you. Appreciating and understanding this fact, enables you to
continuously improve. By doing this, the evolutionary impulse found in all human be-
ings towards growth and development is thus satisfied, and with time you too learn to
be on the correct side of most trades, utilising the correct leverage and growing your
knowledge and understanding.

The passion is what keeps you playing. It is what keeps you striving, even after a
series of losses. Learning more about yourself, the markets, the global factors, the
market movers, the specific nuances of the instrument you decide to trade, etc.

Most experienced traders will tell you that winning should not be euphoric, and losing
should not be depressing, or you would not last the long haul. I wish I could say I felt
neither of these emotions when I trade, but that would be a lie. I still feel damn good
about aligning myself with events in such a way that when the events play out as my
system predicted, I make a substantial profit. On the other hand, I also feel downright
pissed off when I suffer a substantial loss. (Sometimes I am pissed off at myself, at
the markets or anything that happens to bear the burden of being closest to me at the
point of frustration.)

Be aware that here, I am NOT talking about the quick type of “scalping loss” in which
one quickly and efficiently nips a bad trade in the bud. Rather, I am talking of those
trades where the probabilities are so aligned that I DENT an axis in the TRINITY
(Money Management) so badly, that I cannot help BUT KICK MYSELF, WHERE THE
SUN DON’T SHINE causing me to pay the price for this mischief.

However due to having correct mental training, I have developed the ability to quickly
pinpoint which axis needs immediate attention. In addressing the point of failure, I am
able to move back into a resourceful and productive state and consequently, go back
to generating steady profits. (This includes having “proper” losing trades).

21
 There are two type of losing trades, one in which you
obeyed the trinity and one in which you disobeyed the trinity.

In order to develop a strong passion of the game, focus and clarity are of extreme
importance.

First focus on the right and relevant things, and then consider clarity in terms of the
destination in which you are headed.

As I stated at the top of this section, trading is a tough game, but one which is very
rewarding in a lot of ways. Developing the right attitude, skills and processes will bring
rewards far greater than financial benefits alone.

22
 What’s your Goal?
Most people think the goal is very clear and that it is to make money, however the
sub-conscious mind plays a very vital role in how we behave particularly with respect
to the decisions we make when we trade.

In the words of a trader made famous by the book Market Wizards:

“Everybody Gets what they want “

Ed Seykota, Market Wizards (Jack Schwager)
Not clearly defining your intent, or being incongruent with it when defined, is a major
obstacle blocking the path to success, which several traders face. The real unspoken
issue however is that we are now dealing in the realms of the sub-conscious, and
regardless of the giant leaps made by the likes of Freud, Jung, Milton Erickson , etc,
the entire field of psychology much less talk about behavioural finance , is still very
much in its infancy.

This section is to encourage you to think about the reasons and the goals which you
have from trading, in order to attach a big enough responsibility to your psyche to
cause you to retain the trinity always within you, whilst you trade. The bigger and
more passionate you are about your goal to trade successfully, the more pressing
your need to excel at the game becomes. This creates an immediate dynamo effect,
one that becomes clearly reflected in your account balance.

Dismissing the effect of psychology and the mind on your trading is tantamount to
driving whilst drunk. This is the whole ethos behind the Two Scrolls training program.
The exacting belief being, regardless of all the trading information you have, the
incorrect application of your mind will yield imperfect results. The flip side of the
coin being, all the discipline in the world will not give you the ability or knowledge of
markets. Therefore to fully succeed in the markets you need both Scrolls. Scrolls giv-
ing you the vital information you need to control the mind, and scrolls giving you vital
trading information. Feel free to visit twoscrolls.com for more info on this methodology
of training.

Regardless of all the trading information you have, the incorrect application of
your mind will yield imperfect results.

23
 The Method
As I promised at the start of this article, I will tell you exactly how I trade. But before I
do so I want to issue a quick disclaimer.

This is how I trade. It may not be suitable for you. Futures and Options carry a sub-
stantial amount of risk and you can lose more than your initial investment. I would
advice you read the full futures and options disclaimer at the website of any reputable
exchange or broker.

Secondly, it is important that you know that as earlier stated, I do not believe in any
one specific trading system as the panacea to all ills.

Thirdly, I trade at least three different systems, dependent on the nature of the mar-
ket, and the specific product I am trading. The method I am going to briefly go over
below is one for my options account.

Finally, I am aware that you might not fully understand what I am writing about if you
are a beginner, but everybody must start somewhere and I have tried to write as
simply as I can, to ensure the information being shared does not go over anybody’s
head.

In a nutshell, I sell options or their spreads, when they are overpriced. The options I
sell have a delta of less than 25. This implies a greater than 85% chance of me mak-
ing money (Expectation). I often use appropriately distanced strikes (Money Manage-
ment) and dependent on the Implied Volatility (A Measure of the expensiveness or
cheapness of an option) I apply a suitable range of leverage that enables me to still
survive when markets behave in an unexpected manner from what the pricing might
indicate. The relationship to the trinity as described here is very loosely done.

In summary, and for those who might not be fully aware of how the options markets
work, through my trading I attempt to replicate the business of an insurance com-
pany. I do so, by providing insurance services through the use of the options markets,
and I get paid a premium to do so. When the risks are incorrectly assessed and the
scenario unfolds against me, I lose money. When I correctly assess the risks, I get
to keep the premium. Now, though this sounds very simple, believe me, it is not. And
there are a whole bunch of other things I have to look at to support my risk analysis,
which I would not fully go into here.

24
 Summary
In conclusion, and as I have tried to highlight several times over the course of this
entire document, trading is a very challenging venture. A lot sales gimmicks, letters,
un-scrupulous brokers, magazines, exchanges, etc all try to paint a picture that trad-
ing is only very easy after one obtains their product and all your money worries or
trading nightmares would be over.

On the other end of the spectrum, there are those who think that trading is so easy,
you just have to read a couple of books, attend a couple of courses, and hey presto,
you are on easy street!

In my opinion, neither of these two extremes is correct. There is a middle ground,

which I call the Trader’s blueprint, allows the trader to determine what areas they
should focus on to support their trader-development.

The blueprint includes:

The terrain it maps *

The studying of the correct books (Correct being a function of the direction in which
the trader’s SWOT analysis shows him). *

The correct coaching which has the ability to correct the weak areas and strengthen
the strong ones.*

The development of the correct mindset. *

Concerted action and a mechanism for translating and understanding feedback, that
is both technical and psychological.

However once the is clearly discerned, dissected and understood, the aspiring or
hardened trader will begin to catch glimpses of how trading can be experienced as an
effortless and instinctive pursuit.

25
 Conclusion

I have taken time out to put down as much as I can to help you move towards achiev-
ing your trading goals. I have very deliberately not discussed all the opportunities
which are there for everybody who learns to correctly analyze and trade in the mar-
kets). The reason I have not done this and also not spent any time discussing exactly
how much you stand to make in the markets is because I would rather have you think-
ing correctly from the very beginning.

A constant mindset that one of our top psychologists enforces is to focus on the pro-
cesses, and not the outcome. Consequently if the processes are correct, then, posi-
tive outcomes naturally follow.

Focus on the processes and the results take care of themselves.

As I mentioned above, if you are still interested in finding out a bit more about me
and my previous clients to date then the section below would be relevant otherwise,
I hope you enjoyed reading this report. Please let me know your thoughts and how
you plan to utilise the information in it. Feel free to visit the Two Scrolls website (www.
twoscrolls.com) trading blog and give your feedback. I would also love your feedback
even if you disagree with me. Let me know why, and what you think I can add to this
information.

I promised earlier, on in this article, to provide you with more information on how to
identify your trader blueprint. To obtain it, sign up for the free mini course on develop-
ing your trader’s blueprint.

This mini course will go into more detail of exactly what a trader’s blueprint is. It ex-
amines why it is very important, and will help you identify how you should be spend-
ing your time and resources. Also, if you find you have the knowledge, but cannot

26
translate the knowledge into a profitable account balance, then you need to lay your
hands on this information. I urge you to sign up for the mini course on developing your
trader’s blueprint.

In addition to the mini course on the trader’s blueprint, you will get the chance to re-
ceive more free trading/psychology tips from us on a regular basis.

Thanks for taking the time to read this report, and I wish you continued success, in all
of your future endeavours.

Thank you.

Ty Canning
Ty Canning

NB: Please feel free to forward this report to any of your colleagues who may benefit
from this.

27
 Previous Clients
I have had the opportunity of training several clients. My clients range from profes-
sionals who need to hone their skills or cross into new markets or develop stronger
strategies, absolute novices and newbie’s who cannot tell the difference between a
share and a CFD to individuals who do not know how to make money when the mar-
kets are crashing.

Several people fear crashing markets, not realising market crashes offer a sig-
nificant opportunity to make a lot of money really fast.

The results obtained are always the same. Incredibly focused, mentally toughened
traders, with a specific plan of action, who know exactly what is required from them to
win at trading and go on to blaze a path for themselves.

Some of these traders now work for some of the largest trading firms in the World,
(And have asked to remain confidential) others now manage their own hedge funds,
and in some other cases , others just choose to continue to consistently extract prof-
its from the markets. Their successes give me immense pleasure particularly when
I consider the amount of time which was spent with them, nurturing and developing
programs built specifically for them. I would be remiss if I fail to mention that after
the SWOT section, or gaining some experience, some discover that trading is not for
them after all, and still prefer to exploit the markets via the trade recommendation ser-
vice which is occasionally offered. In all these cases, I do not want you thinking about
all the money you stand to make, but rather, I prefer you stay focused on developing
yourself, and becoming the best that you can be at whatever it is you choose to do.

Becoming the best you can be, requires as a first step brutal honesty with yourself.
And the process begins by first having the right mentors and coaches (those who are
straight with you and give you specifics and not vague generalisations). You would
also require proper training and detailed market knowledge. Making the decision to
attend a trading program, and following through on utilising such a program, should
serve to make you a happier and more balanced individual. In other words, a trading
program must revolve around you, as trading affects your life as a whole. This point
is so important that it is worth re-emphasizing. Here is what not to do.

Do not think about all what you stand to gain by jumping onto a course just because
it is offered, do not now become fixated solely on the idea of making a lot of money,
or the opportunity to have a lot of time off work, more time with the kids and all other
benefits which are bound to accrue when you train and trade correctly. Instead I am
asking you to stay focused on one single question: Which is “How can I be the Best
that I can be?”
I wish we could provide training for every single person who requests it. However for
the training we provide, I deliberately restrict the training to a handful of clients at any
one time. This ensures that those who get in on our training programs receive their own
unique and tailor built trading programs and obtain the attention which developing a
unique traders program requires.
IF you are not able to get into the program when one is offered, then I sincerely apolo-
gise in advance. My advice to you would be to still get the free mini course on devel-
oping a trader’s blueprint and carry out the exercises in it. On completion of the mini
course you would need to find yourself someone to help you with the implementation
of this plan.

28
Ty is something of a maverick when it comes to breaking down essential financial
and trading information that may be deemed somewhat esoteric by the common,
uninitiated individual. Not only does he teach with conviction and passion, he also
stimulates the optimistic feeling that enables people to hold positive thoughts about
the realities and potential of success. I have been duly challenged and provoked by
Ty’s tutelage over the years; he has been more than a mentor -. I highly recommend
anything he produces.

Alex Adewole

As European Director of Prestin International, and Head of the European-Chinese Media

Trade Association, my personal interest in the financial markets found confirmation in
the need for our group to strengthen our corporate finance dept, and satiate a deep hun-
ger for the Markets. I’ve always been personally very fascinated in the Stock Exchange
Equity Trading Market, but nor my university years nor my work experience as financial
controller gave me the right tools to understand and actively become a trader. Reading
books about trading also did not help, since I was missing the fundamental basics to
properly understand the argument. And this is exactly what I was given by TwoScrolls. A
solid, clear basic understanding of what trading is, how the markets operate, and most
important what kind of trading would suit me and my company best. I was delighted by
the follow ups after the course, as questions arose the more I got involved in trading. I
can only recommend to anyone interested in trading to take the TwoScrolls courses in
order to understand the basics, learn the tools, and most important understand how and
in what proportion one can trade.

Currently owner and manager at Prestin International (www.prestin-international.com)

and Axess Direct (www.axess-direct.com) which is responsible for delivering viable and
explosive consulting content to mature and developing businesses.

David Von Pressentin

I have only really started using the training material over the past three months and have
become an avid follower of it. I have found your course to be excellent in every way. It
deals with a complicated subject in great depth while remaining crystal clear and stimulat-
ing to follow. And for me it crucially takes you step by step from the theory to real trading.
My knowledge and confidence to trade has improved dramatically...it taught me to be
patient. I would advise you soak up as much as you can from the advice and recom-
mendations. I can only fully endorse what Ty taught as it is clearly the best coaching and
mentoring I have seen anywhere in this area. The recommended software and trading
tools enable you to make informed decisions based on your own analysis, personality
profile and appetite for risk which, in my humble opinion, is the optimum approach. Our
relationship grew into one of trust which is needed when trading and the self positive be-
lief in what risk is taken. My experience before was minimal and as a careful risk taker, it
took some good coaching to make me trade.

I would recommend Ty’s training to anyone since it provides the core ingredients to
understand most trading strategies understand and solidify your belief systems and
also gain the value from taking correctly quantified risks in trading. The course is very
easy to understand - an absolute must for anyone wishing to trade!

Nigel Guy

29
 About The Author
Ty Canning runs a private fund for a handful of investors. He has a charter as an Alter-
native Investment Analyst. Alternative assets cover, hedge funds, quantitative trading
strategies, private equity, mezzanine financing and real estate investing, amongst
other things. He is also a licensed NLP practitioner.

TwoScrolls.com has been founded after nearly a decade within Investment Banking
and the techniques covered (trading and behavioural) are immensely applicable to
both professionals and amateurs striving to make progress within financial markets.

30