That is the tread... alas... here is just a small part of what I've written to myself based on it...
In the 4th post zbestoch quotes:
"Trade a simple trading system with well-defined entry and exit points. Make a commitment to trade this system exactly according to the rules. You need to make a very strong commitment here and not play any games with yourself. The object of this exercise is to work through any resistance you may have to following your rules ...Your objectives are to (1) learn the skill of flawless execution by learning that you can follow the rules you set forth for yourself (I am defining 'flawless execution' as executing a trade immediately upon perception of an opportunity; inclusive within opportunity is the opportunity to exit a losing trade) and (2) to incorporate a belief into your mental system about the nature of probable outcomes so that you believe you can make money in the long run with your trading system, if, of course, you can execute it properly." From Mark Douglas, The Disciplined Trader
Alpha, I rewrite as an experiment in what I believe, or might believe, to be:
Trade a simple trading system with well-defined (detailed guidelines) entry and exit points. Make a commitment to trade this system exactly according to the detailed guidelines. You need to make a very strong commitment here and not play any games with yourself. Your objectives are to (1) learn the skill of flawless execution by learning that you can follow the rules you set forth for yourself (I am defining 'flawless execution' as executing a trade immediately upon perception of an opportunity; inclusive within opportunity is the opportunity to exit a losing trade. Do not wait for multiple confirmations for an entry – take it when it happens – when you see the opportunity. If your plan calls for pre-placing orders at points by thinking ahead do so immediately on perception of an opportunity.) and (2) to incorporate a belief into your mental system about the nature of probable outcomes so that you believe you will make money in the long run with your trading system, if, of course, you execute it properly." If you have the second belief, it goes to you will do it. That you can do it you learn in sim. That you will do it you learn live trading. From Mark Douglas. The Disciplined Trader.
To follow your detailed guidelines exactly, you have to have them detailed enough (yet simple enough) that you can.
……………….Alpha, these are not final thoughts but more stream of consciousness responses; thinking about how I have or might apply the information at the level of trading I am at.
The final interview in the 20th post I posted my notes in Jas’s threat here a few days ago. But just my re-write of it as best as I can internalize it currently. Post #1923.
My personal notes on the above continue, and include some other things with:
So to stay objective… as soon as you place your order… assume the trade becomes 50:50 – anything can happen. It will work or it won’t. Believe that at that point if you leave your stop at 10 – 15 ticks (or a reasonable place about that much, also considering volatility), scale out one lot at the same, and let other lots run (because you can never know how far it will go): you are in fact limiting your risk and taking a greater reward: so believe you will make money in the long run as you work your trading guidelines… trading them flawlessly and objectively because your expectations after you place your order no longer have the force of expectation within them, with the associated fears and self judgement if expectations are not met. You can be present objectively with what is; what you see, not what you think (or were thinking); it will work or it won’t. As soon as you put on a trade it’s a probability game at that point and has no correlation at all to why you entered.
Post #29 NoD quotes: "So when I get a signal from my methodology, at the most fundamental level what this is telling me is that the odds are in my favor that somebody is going to come into the market (this is what the pattern means) and bid it higher than here if I bought or offer it lower than here if I sold. That’s all that it’s saying. Now they’re either gonna come or they’re not, and so as a result I don’t look at this as being a ‘right’ or a ‘wrong’; I look at this as ‘How much distance am I going to give the market to move away from my entry point to tell me that they’re either going to come or they’re not, and any further is not worth the cost of finding out.’"
……….This is an amazing quote. It totally changes my emotional energy around where and why I put my stop. A stop is just the space I give for others to come in with the signal I saw. This has to do with our understanding of what ‘order flow’ is… it is people stepping in or not... in response to the signal I see or anything else they may be seeing.
Chuck Krug in post #37 has led me in many paths… these are a few random sampling of my thoughts:
We have to be rigid in our rules and flexible in our expectations. We need to be rigid so that we gain a sense of self-trust that will protect us in an environment that has few boundaries. We need to be flexible in our expectations so we can perceive with objectivity what the market is communicating (abbreviated MD) becomes:
It’s 50:50 once you place an entry. So you don’t know what will happen… and have to watch and see. This is interesting, so patience in the sense of rejecting distractions is not needed… because without expectations each moment is potentially interesting. Not knowing is the fun part. We have to be rigid in our rules and flexible in our expectations. We need to be rigid so that we gain a sense of self-trust that will protect us in an environment that has few boundaries. We need to be flexible in our expectations so we can perceive with objectivity what the market is communicating (abbreviated MD). The flexibility is the fun part. You are free to immediately place your order, or pre-place your order, on perception of the signal.
Once you put on a trade, have No expectation… do not carry over thinking I’ve lost the last one so this one needs to win to balance it out… or I can take more risk now because I won the last one… It’s 50:50.
Once you put on a trade, have No expectation… The best traders stay in the flow (of immediately acting when they perceive) because they don’t try to get anything from the market; they simply make themselves available so they can take advantage of whatever the market is offering at any given moment.…don’t even try to get anything from the market. Take the middle of the swings; it’s OK. Be available for the middle of the swings… and the occasional runner; and the reversals at edges. I see a signal, I’m available (enter) with no expectation, not trying to get anything; I wait to see if anyone comes in to the signal (with a protective stop giving them as much room to enter as makes sense to me… mental or otherwise); if others enter I don’t know how far it will go so scale out.
Learning to accept the risk is a trading skill—the most important skill you can learn. The risk for each individual entry is 50:50 for Pete’s sake; but that makes all the difference.
It’s 50:50 once you place an entry. And even if it is truly 50:50 (over time my back testing can say it is 60:40 or whatever. So how long does it take to get some other ratio than 50:50? The number of trades you do in a day or a week? No… I choose to believe that with trading it takes hundreds; over more like 3 months than 1 -- SO why keep track of the P&L in my mind within one day? – I keep my losses limited and wins unlimited… so there is the edge. [And after all the work of the process, each entry is still just 50:50 – but the only way I improve as a trader is as I follow detail guidelines flawlessly… so my stats mean something… and become even more objective.] [And I have a bunch of information about the signals I look for to take a position based on my process and back testing… while the beliefs after I take a position are a separate bunch of info.]
It is only when you trade flawlessly that your live stats have any meaning.
……………………
Alpha, I have a couple more pages of re-combining/expanding the quotes Chuck Krug gave. These are just passing thoughts for me. But at some point I’ll sit down and distill them, see what is practical for me.
Hope the above is not to confusing. It is a work in progress. You can see where I'm kind of grinding it out and seeing how concepts apply in various ways, or not.
Then I will get to that place where I say "I believe..."
