‘One Tick’ Trading Drills

Published on: March 02, 2017

In a previous post, we took a look at trading drills to accelerate your progress as a trader. In the earlier article, we looked at the “Cut and Reverse” Drill. In this video below we look at how to take your trading progress through another quantum leap with the “1 tick trade” drill.

These trading drills are used in proprietary trading firms to teach their intern traders. This is not some whacky ‘magic beans’ solution but an actual exercise that new professional traders have to perform as part of their internships.

Trading drills are a bit like driving a car. Someone could explain in theory how to drive a car but you’ll only ever get better at driving if you actually get behind the wheel. This is not a theoretical exercise but a practical one.

How to execute the trading drills…

All trading drills are different. Unlike the cut and reverse drill, you don’t need to be in the market all of the time with this drill but you do need to be aiming to trade frequently.

Your goal is to get into the market and get out with 1 tick/1 cent profit. Yes – that’s it. Just a tick. Sounds simple…

The 1 tick target is there for one reason only – to get you out of the market, so you can look for another entry. Trading drills aren’t necessarily about making a profit and this one is no exception. The goal is to engage and learn.

The drill is over when you reach $300 profit or loss or you run out of time. On a thicker market like Eurostoxx50, that could take you all day. On a thinner market, that might just take a few hours. Once you hit your profit and loss target, assess your performance and the lessons learnt, then do it again.

If you do really badly when you start doing these trading drills, that is a good thing. If you are perfect and win every trade, you don’t have that much to learn. On the other hand if you start off losing most of the trades, you have a lot of progress to make. That means you stand to make serious gains doing these drills.

Trading Progress – the movie!

To demonstrate how to execute the drills, here’s a short video where I explain the trading drills in more detail and demonstrate them on both Crude Futures and Eurostoxx. As you will see, I have no problem being on the wrong side of the market but I don’t stay there for long. You should not try to be right all the time, that’s impossible. You lose a trade, you move on to the next one. The more trades you execute, the better you will get.