Having run a business that way for many years, I can relate to that! When you close a big deal and net a big profit you feel that you've "turned a corner" and the business is finally starting to take off. But if all the critical factors to running a profitable business over the long haul are still missing, nothing's changed fundamentally and the business is unlikely to thrive.
When I started trading, I had a strong of significant profitable trades. At that time I had no researched and tested plan, no way of adapting to changing environments. I didn't even realize it was possible to develop a trading business plan that could predict with surprising accuracy the average profit one could expect each week or month, regardless of the outcome of individual trades.
Back then the important thing for me was to avoid losing trades. This might mean holding through a 5-figure drawdown on a trade in order to eventually escape with a 3-figure profit. I happened to get lucky, because then I was buying dips in an overall bull trend environment. Price ALWAYS came back, I believed.
When the market officially turned from bull to bear, I gave everything back (and a lot more), because I had no properly tested trading plan and therefore had no idea how to exercise proper risk management.
Successful trading is based on statistical probabilities combined with risk:reward ratios. One or the other can be negative, and you can still be successful, but both can't be negative.
Once you have a plan that defines your setups, entry techniques, and management rules, and you know from applying these rules to price action spanning varying market conditions (trend, strong trend, wide range, narrow range, bull and bear) that the overall result is positive after accounting for commissions and average slippage, individual trade outcomes are no longer important. The major stresses you experience are the result of hardware or software malfunctions, not whether to trade and how to manage the trade, because those factors are fully defined for you in advance.
If I traded based on what I felt price was going to do next, I'd be a consistently losing trader. Despite ample experience with the net profitability of my trading plan, I'd estimate that about 80% of the setups feel like they'll never hit my profit target when I put on the trade at the hard right edge.
All you have to do to experience this is scroll a chart to the hard right edge just before a major price move and ask yourself if an entry there feels like you're about to take candy from a baby. On Friday morning just before the market opens, my trading plan tells me to place a buy stop @ 1462.75 to position long the ES with a 6-tick stop loss and a minimum profit target of 1466.00. Does that feel like a trade that's very likely to succeed?
