Quote from oilfxpro:
If day trader has designed a system with small stops and small targets ,when the discretionary day trader trades on instincts in fast moving markets , he will apply the small targets and stops execution , because that is in his memory and execution rules.
The day trader places swing trades with wider stops and wider targets.Unfortunately the memory of small stops and targets remains in his mind, and often interferes under stress and is applied in split seconds , and is often applied to the wider stops/targets system...
The type of day trader you're discussing is a losing trader in the end. More importantly, you're talking about a trader that doesn't have enough
market experience nor enough
trading experience. I'll explain below how a profitable day trader would think in that type of price action you've described in other part of your quote.
Quote from oilfxpro:
...How does the trader eliminate this take small profits mindset? What is the solution.
Many of you who have read Trading in the Zone, may be able to propose a solution.
I've read the book but my answer is
not based upon the book. First of all, profitable day traders obviously do not think like the typical losing day trader.
In fast moving markets you will typically see a losing day trader wondering what the heck is going on...no understanding of why the markets went from contraction or being calm into a market that's expanding or being excited. In contrast, a typical profitable day trader most likely know what's going on and determines that he/she will not use their normal trade management. They will let the trade run further/beyond their usual profit target for a bigger than usual profitable trade.
Simply, profitable day traders typically are very good at knowing when to adapt to exploit fast moving markets or an unusual trade opportunity. Yet, losing day traders typically continues using the "one size fits all" mentality as if the markets will never change.
The markets are always changing and typical losing day traders usually don't have the market experience nor trading experience to adapt to such changes. Yet, profitable day traders typically are able to
adapt and exploit in changing market conditions.
********
Therefore, the solution is market experience and trading experience.
********
They are key variables (not the only ones) that separate profitable day traders from losing day traders. That's why you see some traders say they've studied the markets for 10,000 hours but still losing. They fail to understand that just because they stare at their screens studying charts or price action for 10,000 hours or reading hundreds of message posts at forums ...if you don't have enough market experience or trading experience...you still won't be able to deal with the stress of day trading with real money. More importantly, you won't have the ability to adapt and exploit when market conditions change from slow to fast or from fast to slow, range to trend or trend to range, contraction to expansion or expansion to contraction, fear to greed or greed to fear...whatever you want to label it.
In fact, you yourself struggle with discretionary day trading in your attempt to add it to your other trading style as a automated system trader. Your failure listed by you mainly didn't have anything to do with your actual trade signals. Thus, you don't have enough trading experience directly related to day trading. Yet, you have been involved in trading for over a decade via your automated systems. Therefore, it's safe to assume you have enough market experience but wasn't able to exploit such in day trading.
Regardless to why
so few are profitable at day trading and why
so many are losing at day trading...I'm a strong believer that most traders (day traders, swing traders and position traders) are unable to get beyond their entry signals. Then when they start to realize there's more to profitable trading than just entry signals...it's usually too late.
Here's an interesting question...do you think profitable day traders will be able to continue their success if they switch to swing trading with all that day trading mentality still fresh in their minds. ???
Mark
