In the book Alchemy of Finance, legendary trader George Soros recalls his short sell of the home builders in the 1970s. He notes that he made a lot of money from the trade, but then did something interesting -- he looked at his notes for the original thesis for the trade which discussed how the sector would dive then rebound and then collapse once again [also known as a retracement]. Revisiting his own words Soros decided to re-short the home builders and once again walked away with a handsome profit.

Out of that little story Soros ultimately developed a simple theory he called “reflexivity of the markets” which has allowed him to make billions over the years.

Doing the exact same thing over and over and over again.

No reinventing the wheel.

No finding the next great thing before everyone else.

So what can we learn from this story about one of the greatest traders of all time?

Write it down.

Soros, steeped in the European tradition of gentlemanry [yes, I made that word up], writes because he fancies himself a Renaissance Man and craves the intellectual kudos almost as much as the material wealth... almost. 

He was well compensated on the aforementioned trades and, from what I hear, he benefitted regularly because he was able to return to his notes, be reminded of his original thesis for a trade and do the exact same thing again. The reminder (along with some favorable price behavior) induced him to re-initiate a trade that had already paid him handsomely. For yet more profit.

I’m writing this (and plan to post it) on a Friday. To the fledgling traders among you... take half an hour this weekend and write out your best trading setup. Doesn’t matter what time frame you trade. Portfolio, Swing or Day Trader. Write down each action step by step.

Forget indicators, systems, and gurus. The single most important improvement you can make right now is to write out your trading setup on paper.

Write out all the times that you will NOT trade. 

Several years ago, one of the best traders in my day trading room -- a guy who’d been on a tear over the previous couple of months -- did just that. He sent me an IM (remember those?) with his recording of those thoughts.

It was an amazing document, showing crystal clear reasons for why he would and would not engage with the market and helped me understand how he’d been so successful using one of my trading setups.

Writing forces discipline.

Discipline creates structure.

Structure leads to a process.

Process leads to profit.

Want to stop failing in your trading?

Get to writing this weekend -- it will be among the best trading hacks you ever employ.

You're welcome.