Quote from Dantheman:
you can't follow your rules because you have no discipline.
(i'm not making a judgement about your rules here, nor am i making a suggestion as to whether or not you should strive to be a pure mechanical or pure discretionary trader)...
what i will say is this...
you know that you need to do that 20 trade exercise in douglas' book in order for you to KNOW that you can trust yourself to execute your plan correct?
well then, if the goal RIGHT NOW is to be able to execute without fail, then that's what you must do.
how? simple. just define some very simple entry criteria on a 5 min chart of whatever product you like. come up with some simple trade management for that trade.
then execute.
forget all the secret this and secret that for a moment.
forget your current 'system' for now (i'm not saying scrap it).
focus on what you need right now...which is a consistent disciplined approach that you follow regardless of whether or not you make money during this time.
shoot i'm not saying anything different than what douglas suggests. right now you are meandering. you're in gear but you're just spinning your tires. you ain't getting anywhere!
i'm tired, so if anyone has any dissagreement in semantics with what i said, please save it. if there is dissagreement at a core level however, please use constructive (i.e. offer alternate semi-detailed views) criticism. thank you.
lol....
neat post.
the only thing id add to this is imo douglas doesnt mention that the end result of this exercise should be a profit (great if it is of course!). the purpose of the exercise imo is just to get a working belief in the 5 probabilities ethos.
this is why he states that you should be willing to put aside $xxxxxxx in case every trade is a loser.
in other words, the exercise could take 20 or 100 trades to complete - but it is not complete until you do have a working belief in the probabilities/true nature of the market.
i think this is an important factor when doing the exercise. from my own experience when I did it, i had a loss and assumed it was because my edge was non existent. the reality was that i wasn't being selective enough in deciding when my edge was there. in other words, my edge wasnt there on most of the trades!
this can create a lot of issues and psychological damage until we are aware of this.
the nub of what i am saying - and this has been very important in my own trading is as follows:
douglas talks of flawless execution and that we should execute our system flawlessly - ie take every VALID set up.
but this does not mean taking EVERY set up. each set up should, to be defined clearly and concisely, so as to leave no room for doubt if it is there or not. lets say there are 4 criteria here:
1/ clear long time frame signal
2/ clear short time frame signal
3/ volume confirmation
4/ sufficient liquidity
its no use taking the trade if only 1 or 2 of these criteria are met. all 4 MUST be met, and then and only then should that trade be taken. this is flawless execution. taking every trade that meets ALL of your criteria, not just 1 or 2 (like I used to do thinking I was trading flawlessly, telling my self 'you dont know what the market will do next' etc according to the 5 probabilities)
hth
