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Pat Bailouni is a trader and trading-psychology coach who works with both retail and institutional traders on performance, prop-firm funding, and mindset. In this interview, he unpacks how he rebuilt after an early capital loss, why psychology is “90% of the picture,” and how a clear, mechanical plan lets you execute your edge without predicting the next tick. You’ll hear how Pat structures his top-down analysis, the realities of prop-firm pressure, and the habits that keep emotions from hijacking execution.
In this piece, you’ll learn Pat’s core distinctions—process-based versus outcome-based decisions—and how to train that muscle with pre-trade journaling so your edge can play out over large sample sizes. We’ll break down his step-by-step trading plan (daily value areas down to 4H/1H/5M triggers), the risk-scaling protocol he uses to protect psychology in drawdowns, and the reframing work that neutralizes the “win good / loss bad” trap. Expect practical rules you can apply today to size risk smarter, regulate fear and greed, and keep your trading in alignment with a durable edge.
Pat Bailouni Playbook & Strategy: How He Actually Trades
Foundation: Process First, Outcome Second
This is the core of how Pat operates. He makes the process so clear that results become a byproduct, not a distraction. Here’s how to anchor your trading around repeatable actions instead of chasing winners and fearing losers.
- Define a single, written trading plan you can read in under 90 seconds before each session.
- Pre-commit to your setup, risk, and exit logic before you open your platform.
- Grade every trade “A/B/C” on process adherence, not on P&L.
- If you break a rule, reduce the size by 50% for the next 3 trades while you rebuild discipline.
- Track 3 numbers daily: plan adherence (%), average risk per trade (R), and emotional intensity (1–10).
Market Framework: Top-Down to a Simple Trigger
Pat likes to simplify complexity: big picture first, then a clean, mechanical trigger. The goal is to avoid prediction and let structure guide you toward asymmetric opportunities.
- Start with higher timeframes (Daily → 4H → 1H) to define trend, key levels, and value areas.
- Mark one bias per session: “trend, range, or transition”—no hedging, pick one.
- Only trade in the direction of the session bias unless a predefined reversal pattern appears.
- Drop to execution timeframe (15M/5M) for the actual trigger—don’t reanalyze the macro there.
- Confirm alignment: if higher-timeframe structure and execution signal disagree, stand down.
Set Up Menu: Keep Two Core Plays
Pat’s edge isn’t 12 strategies; it’s ruthless focus on a few that he knows cold. Choose two bread-and-butter plays and master their rules, variations, and failure points.
- Choose one trend-continuation setup and one mean-reversion/setup-at-level.
- Write a 1-page spec for each: context, entry pattern, invalidation, profit-taking, and common mistakes.
- Require three objective confluences (e.g., HTF level + momentum shift + liquidity sweep).
- Ban “discretionary overrides” unless they’re explicitly listed in your spec with examples.
- Archive any setup that drops below a 52-week win rate or expectancy threshold you define.
Risk & Sizing: Protect Psychology First
Consistency comes from consistent risk. Pat’s sizing logic defends your mind so you can actually execute the plan when it matters.
- Risk a fixed fraction per trade (e.g., 0.25–0.5% of equity) and never exceed it intraday.
- Convert stops to price-based invalidation (not “feel”): if X level breaks, the idea is wrong.
- Use a daily loss cap (e.g., 1–1.5% of equity) and a 2-strike rule: hit the cap or 2 process violations → stop.
- Scale risk down by 50% after any −3R day or −6R week; restore only after 10 trades of full rule adherence.
- Keep positions uncorrelated: if two trades share the same driver, treat them as one risk unit.
Entries: Mechanical, Timed, and Boring
Pat’s entries are rule-based, so there’s nothing to “debate” in the moment. When the picture matches the playbook, you click; when it doesn’t, you don’t.
- Enter on your predefined trigger only (e.g., break-retest, engulf after sweep, or specific candle confirmation).
- Place a stop where the setup is proven wrong, not where the loss “feels comfortable.”
- If price runs without tagging your limit, let it go—no chasing.
- For continuation plays, demand fresh momentum (e.g., higher high + shallow pullback) before entry.
- For level plays, require evidence of rejection (wick/absorption/shift in control) at the exact level.
Trade Management: From Open to Flat
Once in, Pat manages by rules that remove ambiguity. The idea is to harvest R multiple and keep losers small—without turning a trade into a hope-and-pray situation.
- Move to breakeven only after a specific condition (e.g., +1R or close beyond structure).
- Partial at +1R to pay risk; trail the remainder behind structure, not P&L.
- Predefine 3 exits: invalidation stop, structural trail, time stop (e.g., 2 sessions without progress).
- Never widen stops; only reduce risk.
- If slippage or news volatility hits, treat it as one of your expected edge costs—don’t retaliate with revenge trades.
Playbook for Drawdowns: Reset Fast, Not Hard
Pat treats drawdowns as a signal, not identity. The plan is to stabilize quickly and preserve your decision quality.
- Switch to half-size after a −4R stretch; return to full only after 20 trades of plan adherence ≥ 90%.
- Reduce frequency to your best setup only until the equity curve re-stabilizes.
- Add a 24-hour “no new trades” rule after any day with two process violations.
- Conduct a 30-minute root-cause review (context, trigger, management) on the last 10 trades.
- If you’re not sleeping well, you’re over-risked—cut size until sleep is normal.
Mindset & Behavior: Neutralize the Hot/Cold Brain
Pat’s edge leans heavily on emotional regulation. Your job is to stay neutral—wins aren’t “good,” losses aren’t “bad,” they’re just samples.
- Pre-trade: write your bias, setup, risk, and the one behavior you’ll execute perfectly today.
- During trade: if heart rate spikes, step away for 90 seconds, then re-check the plan, not the P&L.
- Post-trade: score execution 0–10 and jot one improvement that would have raised the score by 1 point.
- Ban platform browsing and social feeds during market hours.
- Use a 2-minute breath routine before the first trade; anchor to a cue word (e.g., “neutral”).
Prop-Firm & External Pressure: Keep the Frame
If you’re trading with funding rules, pressure can hijack your process. Pat’s answer is structured: codify constraints and make them part of the plan.
- Translate prop rules into daily operating limits (max daily draw, trailing, news bans) and tape them to your monitor.
- Trade fewer but higher-quality setups when close to daily or overall loss limits.
- Stop trading for the day if you hit 50% of the daily loss limit twice in a week.
- Withdraw or lock profits at predefined milestones (e.g., every +5% increase) to protect mindset.
- Run a “no-trade day” after any rule breach to prevent spiral behavior.
Data & Journaling: Measure What You Want More Of
Pat’s improvement loop is data-driven and simple. You’re not just saving screenshots—you’re tracking the behaviors that produce expectancy.
- Log every trade with context screenshots (HTF/entry/management) and a one-line thesis.
- Track: setup type, R risked, R realized, MFE/MAE, adherence score, and emotional intensity.
- Review weekly: top/worst 10 trades by expectancy; prune what’s not working.
- Maintain a “mistake ledger” with a cost tally; aim to reduce error-cost by 20% quarter-over-quarter.
- Rehearse next week’s two key scenarios and write the exact trigger rules you’ll execute.
Weekly Operating Rhythm: A Simple Cycle
Pat keeps a clean cadence so the plan remains alive and updated. The rhythm prevents drift and keeps your brain in execution mode.
- Sunday: mark bias, key levels, and two primary scenarios per instrument.
- Daily pre-market: 10-minute read of plan + breath routine + “one behavior to nail” statement.
- Post-market: quick journaling, attach screenshots, and score adherence.
- Wednesday: midweek review of equity curve and error-cost; adjust size if needed.
- Friday: archive trades, update playbook examples, and choose one micro-skill to practice next week.
Instruments & Correlation: Don’t Double Up on the Same Idea
Pat keeps risk clean by respecting correlation and shared drivers. The aim is to avoid stealth over-exposure.
- Limit to 2–3 instruments that fit your setups (e.g., one index future, one FX pair, one commodity).
- If two opportunities share the same macro driver, take only the best one.
- Treat highly correlated positions as a single risk unit when sizing and capping daily loss.
- Remove any instrument that consistently produces outlier slippage against your method.
- Re-evaluate the instrument list quarterly using expectancy and error-cost metrics.
Personal Ruleset: Non-Negotiables
Finally, Pat runs on a handful of “never break” rules to keep the edge intact. Make your own—and enforce them like a pro.
- Never trade outside your written plan window and approved setups.
- Never widen a stop.
- Never add to a loser unless it’s a predefined scale plan with strict invalidation.
- Never chase a missed entry; next trade, not this trade.
- Never let a good day turn bad—hit the daily target? Close the platform.
Build Process Discipline: Predefine Setup, Risk, and Exit Before Entry
Pat Bailouni hammers one idea: decisions are made before you trade, not during. He writes his setup, exact entry trigger, invalidation level, and exit logic in plain English, so when the market opens, he’s just following instructions. That keeps emotions from inventing new rules mid-trade. If the picture isn’t exactly what he pre-wrote, he passes and waits for the next sample.
Pat Bailouni also treats risk as a contract with himself: fixed size, price-based stop, and a clear reason to exit winners. By defining the whole plan up front, he can grade each trade on execution, not P&L, and spot where discipline slipped. The payoff is fewer impulsive clicks, smaller drawdowns, and a smoother equity curve. Your job is simple—decide the rules when you’re calm, then execute those rules when the heat turns up.
Size Risk Small and Fixed to Protect Psychology and Edge
Pat Bailouni keeps risk tiny and consistent so his head stays clear. He pre-decides a fixed fraction per trade and never lets a “good feeling” bump it higher. That one rule prevents hot streak overconfidence and cold streak panic from wrecking the plan. By tying stops to invalidation instead of comfort, he makes every loss a controlled cost, not a personal drama.
Pat Bailouni also caps daily loss and treats correlated trades as a single exposure. When he hits a rough patch, he halves in size automatically, focusing on execution quality until the edge reasserts. This creates a stable emotional baseline where decisions aren’t hijacked by P&L swings. Small and fixed risk doesn’t slow growth—it preserves the engine that produces it.
Trade the Mechanics: Follow Structure, Not Predictions or Feelings
Pat Bailouni treats trading like running a checklist, not reading tea leaves. He starts with a higher-timeframe structure to set a binary bias, then waits for his predefined trigger on the execution chart—no improvisation. If the trigger doesn’t print at the level and context he specified, he lets the idea go. The point is to execute the same mechanics every time so the edge shows up over a large sample.
Pat Bailouni also removes “feelings” by forbidding mid-trade reinterpretation. Once in, he manages by rules—move to break-even at +1R, partial at structure, or time-stop if the trade stalls—rather than reacting to every tick. When the higher-timeframe and execution picture disagree, he stands down instead of forcing alignment. By obeying structure and mechanics, he avoids prediction traps and keeps his equity curve tied to repeatable actions, not market guesses.
Diversify by Instrument, Strategy, and Timeframe to Reduce Correlation
Pat Bailouni avoids stealth overexposure by treating correlation like a hidden tax on risk. He won’t stack trades that are all driven by the same macro impulse, even if they look different on the chart. If two ideas share the same driver, he takes the cleanest one and sizes it properly instead of doubling up. That simple filter keeps losing streaks from compounding when a single theme turns against you.
Pat Bailouni also diversifies by play type and holding duration, not just ticker symbols. He pairs a continuation setup with a level-reversal setup and runs them on different timeframes so the edge doesn’t rely on one market regime. Time diversity matters too: a quick intraday play behaves differently from a multi-session swing, which spreads outcome variance. By mixing instruments, setups, and durations deliberately, he smooths the equity curve without diluting focus—and his risk limits reflect the combined exposure, not the number of charts on the screen.
Use Volatility-Based Stops and Targets for Consistent Expectancy
Pat Bailouni anchors risk to the market’s current pace, not a random number of pips. He prefers stops at true invalidation that scale with volatility—think ATR or recent range—so losers stay comparable across calm and fast conditions. Targets are set as multiples of that same volatility unit, which keeps R multiples realistic instead of wishful. This turns chaos into structure: when volatility expands, the stop breathes; when it contracts, the stop tightens.
He also adjusts position size inversely to volatility, so the cash risk per trade stays constant. On hot, wide days, he reduces size to match a larger stop; on quiet days, he allows a bit more size with a tighter stop. Pat Bailouni evaluates entries only if the volatility-adjusted stop still offers a minimum reward-to-risk; if not, he passes and waits for cleaner math. Over time, this volatility-dynamic approach stabilizes expectancy, flattens drawdowns, and keeps your execution calm when markets speed up or slow down.
Pat Bailouni’s core message is simple: consistency comes from a clear, step-by-step trading plan you can execute without second-guessing, and the moment fear or greed takes over, execution collapses. He frames the job as building a system first—defining the edge, writing the rules, and then grading yourself on adherence—because a written plan protects you from those two emotions that most often pull traders off track.
From there, Pat’s method is deliberately top-down: mark value and structure on the daily, confirm intent, then drop through 4H/1H to 5M for the actual trigger—only when specific, prewritten conditions line up. It’s a mechanical funnel that keeps you out of prediction, and it’s built to be repeatable across sessions. He pairs that with a risk protocol that scales down exposure as drawdown grows—e.g., stepping from 1% to 0.5% to 0.25% as you near a buffer—so psychology stays intact and you buy time for the edge to reassert.
What makes Pat credible is that he’s lived both sides: he trades, coaches institutional and retail traders, and has eaten the pain of losing outside capital before learning to manage expectations and emotions. That experience is why he emphasizes protocols that shield mindset first and keep you operating the plan instead of reacting to P&L noise. If you boil his lessons down: codify the edge, execute the mechanics, and defend your headspace with progressive risk controls—because process-based decisions are the only reliable path back to consistency.
