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Former RAF fighter-controller-turned-FX pro Paul Wallace sits down for a candid interview on the Desire To Trade podcast with Etienne Crête. Wallace is known for his performance-first approach—teaching traders how to think like pros, manage risk like it’s oxygen, and run a repeatable process. He’s coached retail and prop traders, works with institutions, and runs projects helping military veterans transition into trading. If you care about turning randomness into routine, this conversation is gold.
In this piece, you’ll learn Wallace’s core playbook: why “live to fight another day” sits at the center of his risk approach, how to use simple and precise triggers to beat hesitation, and how to tailor entries and exits to whether you’re a fear-based or greed-based trader. We’ll cover his 4Ms (markets, method, money, myself), the checklist habit that keeps you disciplined, how to debrief trades to accelerate growth, and why realistic expectations and proper capitalization save careers. Short, practical, and immediately usable—exactly how Paul Wallace would want it.
Paul Wallace Playbook & Strategy: How He Actually Trades
The 4Ms: Markets, Method, Money, Myself
This is Paul Wallace’s core operating system. It keeps your trading simple, focused, and measurable, so you know exactly what to do next and why it fits your edge.
- Markets: trade only instruments you’ve profiled (spread, session behavior, volatility, typical ranges) and keep a maximum active watchlist of 6–10.
- Method: write a one-page spec for each setup (context, pattern, trigger, invalidation, management) and never trade outside a spec.
- Money: cap daily risk at 1R–1.5R; stop trading for the day if hit; weekly loss cap = 3–5R.
- Myself: log energy, mood, and focus 1–5 before first trade; no trade if score <3.
Pre-Market Routine & Building a Bias
Paul treats preparation as a performance ritual. The goal is to arrive with a clear, testable bias and a small set of if-then plays—not predictions.
- Mark HTF structure first: trend, key swing highs/lows, and the two most likely paths the price can take.
- Define today’s condition: trend, range, or transition; if unknown, start as range-bound.
- Write a one-line bias (“bullish while above 1.2740; neutral below”) and the line-in-the-sand price.
- Set two primary plays and one alternate; if the market invalidates the bias, swap to the alternate—no improvising.
Setup → Trigger → Management → Exit
Execution is split into stages to remove hesitation. Each stage has a checklist; you advance only when boxes are ticked.
- Setup: must align with the day’s condition (e.g., pullback in trend day, fade at range extreme).
- Trigger: choose one precise mechanism (e.g., break of inside bar, LTF HH/HL after a sweep); no trigger, no trade.
- Initial stop: beyond structural invalidation (e.g., beyond last swing/zone), not arbitrary pips.
- Management: pre-declare add/scale rules; move to breakeven only after specific structure forms (e.g., HL after entry).
- Exit: pick one of three—fixed multiple, structure target, or time-stop; stick with it for the whole session.
Risk & Position Sizing That Survives
Wallace is “risk first.” Your job is to stay in the game long enough for the math to work.
- Risk 0.25%–0.5% per trade until you have 100 live trades of data; max 1% once consistent.
- Convert ATR to stop distance; size so R is constant regardless of volatility.
- Hard daily drawdown stop (e.g., −1.25R); after first loss, cut next trade risk by 50%; after two losses, stop for the session.
- Never widen stops; cancel the trade and re-evaluate if the price invalidates the structure before entry.
Trade Types: Fear vs. Greed Personalities
Paul maps tactics to trader temperament. Pick the lane that matches your wiring so you can execute without second-guessing.
- Fear-leaning traders: use limit entries at value with wider initial stops and partial exits at 1R.
- Greed-leaning traders: use momentum breaks with tight initial risk and trail aggressively.
- Run a 20-trade experiment on one lane; switch only after completing the full sample.
Two Core Plays to Master
Fewer plays, deeper reps. Wallace prefers one trend-continuation and one reversal play.
- Trend Pullback: enter on first LTF higher-low/lower-high into an HTF zone; stop beyond the zone; partial at 1R, runners to structure.
- Range Reversal: fade at prior day high/low or marked range edge after a liquidity sweep plus failure; time-stop the trade if no follow-through in 30–60 minutes.
- Only take plays during your proven sessions (e.g., London or NY overlap) and skip the lunch lull.
Intraday Execution Checklist
Checklists turn stress into steps. You either have conditions or you don’t—no debate.
- Pre-trade: bias written, plays defined, levels marked, alerts set, risk sized.
- At trigger: screenshot, confirmConfluence (condition + setup + trigger), announce entry/stop/target in journal.
- During trade: follow the management script; no news-driven tinkering unless it was in the plan.
- After exit: record reason, emotion tag, and any deviation from plan.
After-Action Reviews (AARs)
The edge compounds in debriefs. Paul’s AAR format is simple, fast, and brutal on excuses.
- Write what happened, what you did, what you’ll do next time—three bullet lines, max two minutes.
- Flag errors as process, discipline, or analysis; provide an actionable fix for each error.
- Collect weekly the top two recurring errors and design one preventive rule per error.
Journaling & Metrics That Matter
Measure the parts you control. Wallace wants tiny, boring numbers that predict staying power.
- Track: win rate, average R, expectancy, average adverse excursion, time-in-trade, and session performance.
- Maintain a 1-page dashboard: last 20 trades’ expectancy and error rate; don’t change strategy unless you finish a 50–100 trade sample.
- Color-code A-setups vs B-setups; if B-setups underperform, ban them for the next 20 trades.
Weekly & Monthly Operating Rhythm
Consistency beats intensity. Your calendar is part of the method.
- Weekly: re-profile instruments, update levels, review stats, and pick one improvement focus for the coming week.
- Monthly: run a deeper audit—profit distribution by setup/session, slippage, and drawdown days; adjust risk ceilings and session times accordingly.
- Schedule one no-trade study day per month to rebuild playbook clarity and reduce noise.
Capitalization & Scaling Rules
Growth without survival is a mirage. Scale only when the data says you’re ready.
- Raise unit risk by 25% after two consecutive profitable months and an error rate <10% of trades.
- Add instruments only when the current watchlist shows stable expectancy over 100 trades.
- Withdraw profits at set milestones (e.g., every +15R) to reduce pressure and preserve confidence.
Size Small, Cap Daily Losses, Survive Drawdowns Without Drama
Paul Wallace hammers home that the first edge is staying solvent. He’d rather see you risk a tiny slice—think a quarter to half a percent—than swing for “make-it” trades that nuke confidence. The goal isn’t to win today; it’s to be alive and sharp tomorrow. Wallace treats drawdowns like weather: expected, manageable, and never a reason to change the route mid-flight.
His rule set is brutally simple: define R before entry, never widen the stop, and cap the day after a fixed loss limit. If you hit that cap, you’re done—no revenge trade, no “one last try.” After the first loss, he suggests cutting risk for the next trade; after two, he often stops for the session. This ratchets pressure down, keeps your process clean, and lets expectancy work. Wallace knows small size isn’t sexy—but it’s exactly how you keep the drama out of trading and compound when others are blowing up.
Trade the Mechanics, Not Predictions: Setup, Trigger, Manage, Exit
Paul Wallace strips out fortune-telling and replaces it with steps you can actually execute. He wants your chart work to produce a condition and a play, not a prophecy. That’s why he breaks every trade into four parts: setup, trigger, management, and exit. If one piece is missing, you don’t press the button—simple.
For Wallace, the setup defines context and invalidation; the trigger is a precise event that fires entry; management dictates adds, trims, and when to go to breakeven; the exit is preselected—fixed R, structure, or time. You don’t mix and match mid-trade. If the price moves without the trigger, you let it go. If structure breaks, you cancel and wait. The edge isn’t in guessing; it’s in repeating the same mechanical sequence until the math shows up.
Let Volatility Decide Position Size and Targets Every Session
Paul Wallace wants traders to size to the market they’re actually facing, not the one they wish for. When ranges expand, he cuts position size so the same R fits a wider stop; when ranges compress, he can size up because the stop is tighter. He’ll anchor stops to objective volatility—ATR, recent swing distance, or session range—so risk per trade stays constant while lot size floats.
Wallace also adjusts targets with the same logic. If ATR is thin, he takes profits faster and avoids overstaying; if volatility is rich, he lets runners work to structure instead of grabbing crumbs. This turns choppy days into quick singles and big days into home runs, all with the same process. No hunches, no guessing—just letting volatility set the boundaries while you execute the plan.
Diversify by Instrument, Strategy, and Timeframe to Smooth Equity
Paul Wallace pushes diversification as a performance tool, not a buzzword. He spreads risk across instruments that move differently, pairs a trend-continuation play with a mean-reversion play, and runs them in the sessions where each historically shines. That way, when one style hits a cold patch, the other can keep the equity curve moving. He also staggers holding periods—scalps for daily cash flow, swing positions for bigger structural moves—so you’re not relying on a single rhythm.
For Wallace, this mix only works if the plays are truly independent. He insists on separate rules, separate tracking, and the discipline to shut down any lane that starts correlating or underperforming. He’ll cap exposure so no single instrument or setup can sink the day, and he regularly rebalances attention toward what’s actually producing. The result is a steadier curve, fewer emotional swings, and a process that survives the market’s mood changes.
Choose Defined or Undefined Risk Rules and Execute Consistently
Paul Wallace makes you choose your lane before you trade: defined risk (fixed, pre-set loss) or undefined risk (open-ended, managed with structure). If you’re a defined-risk trader, you pre-declare the stop, calculate size to 1R, and never widen it. If you’re running undefined risk, Wallace expects strict rules for reducing, hedging, or flattening on structural breaks—no “hope” allowed. The point is certainty: you know what happens next regardless of what price does.
Once the lane is chosen, Wallace demands ruthless consistency. You don’t flip from defined to undefined mid-trade just because a candle looks scary or promising. You log outcomes by lane, review expectancy by lane, and scale only when the data says that lane works. That consistency shrinks decision fatigue, makes your results analyzable, and keeps losses from spiraling when markets get weird. In Paul Wallace’s world, the rule you follow is the edge you keep.
In the end, Paul Wallace’s edge isn’t a fancy indicator—it’s a ruthless commitment to process. He sizes small, caps the daily damage, and treats drawdowns as a cost of doing business. He trades mechanics over predictions: a setup that defines context and risk, a precise trigger, a management script, and a pre-chosen exit. Volatility sets his stop distance and profit expectations, so he’s never fighting the tape; he’s adapting to it.
Wallace also spreads risk across instruments, strategies, and timeframes to keep the equity curve steady, then forces consistency by choosing defined or undefined risk before the trade and sticking to it. The common thread is discipline: write the rules, follow them trade after trade, and let the math show up. Do that, and you’re playing Wallace’s game—survive first, execute cleanly, and compound when conditions align.
