Another issue about hindsight chart analysis that can cause discipline problems when traversing into trading live with real money in streaming data...
Market conditions change often. Thus, that trade signal you got on Monday within the market context of that Monday...the exact same trade signal on Tuesday will be within a different market context. Simply, same trade signal but different market context. For example, Monday's price action controlled by a surprise FED rate announcement and Tuesday's price action controlled by negative geopolitical event out of Europe.
This is one of the flaws with backtesting and flaws with simulation trading because its rare to know a trader that has also documented the market context of any trading day in the past that correlates with the day of the trade signals.
Simply, in real trading in live conditions...the market context will be different and it will then produce a price action you're not use to seeing when your trade signals appear. Therefore, you will trade differently or possibly have a higher chance of discipline problems even though the trade signal itself is exactly the same.
This is when that mindset comes into play...the ability to see through the fog and execute your trading plan exactly the way it was designed. Just as important, you need to have the ability to adapt (make positive changes on the go) when an unusual market environment shows up so that you can exploit it...something that occurs a few times per month.
In fact, its normal to hear profitable traders say that those few days per month are usually their most profitable trading days of the month because they were prepare to see their trade signals in very unusual market condition. In contrast, just the opposite for losing traders because they study exclusively hindsight charts and/or didn't study recordings/replays of their trade signals backtested price action.
Solution - Hindsight charts + Recordings/Replays...the latter more important to be properly prepared when traversing from backtesting to real trading as a discretionary trader (no automation).
Market conditions change often. Thus, that trade signal you got on Monday within the market context of that Monday...the exact same trade signal on Tuesday will be within a different market context. Simply, same trade signal but different market context. For example, Monday's price action controlled by a surprise FED rate announcement and Tuesday's price action controlled by negative geopolitical event out of Europe.
This is one of the flaws with backtesting and flaws with simulation trading because its rare to know a trader that has also documented the market context of any trading day in the past that correlates with the day of the trade signals.
Simply, in real trading in live conditions...the market context will be different and it will then produce a price action you're not use to seeing when your trade signals appear. Therefore, you will trade differently or possibly have a higher chance of discipline problems even though the trade signal itself is exactly the same.
This is when that mindset comes into play...the ability to see through the fog and execute your trading plan exactly the way it was designed. Just as important, you need to have the ability to adapt (make positive changes on the go) when an unusual market environment shows up so that you can exploit it...something that occurs a few times per month.
In fact, its normal to hear profitable traders say that those few days per month are usually their most profitable trading days of the month because they were prepare to see their trade signals in very unusual market condition. In contrast, just the opposite for losing traders because they study exclusively hindsight charts and/or didn't study recordings/replays of their trade signals backtested price action.
Solution - Hindsight charts + Recordings/Replays...the latter more important to be properly prepared when traversing from backtesting to real trading as a discretionary trader (no automation).
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