Sticking to the Plan...NOT!!!

qlai said:
How do you program your algo to stop you out? Can it tell the difference between fake out spike vs. a real move? Are you telling me that flash crashes are unemotional responses? Can someone give me an example of an algo specifically designed to compete with a manual day trader?
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You program your system to stop you out, that's it. Either by way of each individual trade within a system or a system itself or a basket of systems, either by time, by contracts traded or by adverse price movement. Alternatively you can be always in the market with a basket of systems and one will hedge another.

One system can fade fake out spikes another can trade a real move/trend. Some can do both and you accept the beating when there is a momentum shift in direction.

The image below is an example of a system that is designed to do what I can't do manually.

NQ.PNG
 
They said:
You program your system to stop you out, that's it.
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So the question was in a context - can you automate emotions out of trading? If your system has stops, it will most likely bail out at the back-tested "maximum pain," which to me is pretty "emotional." Discretionary traders can determine, what to algo looks identical situation, to either exit, add, or stay put. Both algos and manual traders do make bad decisions from time to time. It's not exclusive, both have merits. I just don't believe there is salvation in automation.
 
You can automate away the emotion that comes with 'I missed the entrance', 'I didn't follow my stop loss', 'I didn't let my winner run', etc. As far as stops go I think most profitable systems traders are looking to minimize risk and thus are not basing their stops on a max pain threshold that would certainly lend itself to emotion.

I definitely agree that automation is not salvation from emotion, that comes with the ability to trade from an intellectual perspective vs emotional one, to not operate from one's amygdala when facing a financial loss or any other life experience that doesn't provide immediate gratification to the mind and senses. However, automation will force one to stick to their plan, if they have one.

Somewhat related I recently met a guy that worked for David Einhorn for 10 years. He was an analyst. He would rip apart around 15 companies at a time but said in the end it came down to gut feel on which company they would choose to take a stake in or short. He retired early because he said he destroyed his gut biome. He couldn't eat anything for a year but rice after retiring. So, emotion runs deep, all we can do is try to minimize it.

https://academic.oup.com/nutritionreviews/article/76/7/481/4985887
 
John9999 said:
I am so F** mad at myself. I deviated from my plan today and took trades that I basically created out of thin air. ARRGH, still made $ this week, but so what. Did great all week until today and this very old bad habit came back to haunt me. I am not even happy about the "out of system" trade that I took that made $$... it is not good trading.

ARRGHH...

anyone else suffer from this? any solutions ?
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You have to learn acceptance. You won't be in every trend, but you try to learn why you miss some of them, so they become learning experiences.

I kept a "dumb" journal for 20 years plus, any trade that wasn't in rules, I put trade in journal and monitored it but not into account, after 10,000 of these, I added up I was wrong 95% plus of the time, so I learned my emotions were wrong, but can be used and programmed as patterns form. So long as you can identify a pattern, it can be programmed.

When all else fails, apply a tens unit between your legs and switch to highest unit for a "second" any time you violate your rules, only takes once a year. If you married, let your spouse do controls if you trust them, ROFLMAO. People tend to change due to intense pain, or water boarding to give information, we use it all the time to get information out of the enemy. In trading, "we" often worst enemy.
 
They said:
Somewhat related I recently met a guy that worked for David Einhorn for 10 years. He was an analyst. He would rip apart around 15 companies at a time but said in the end it came down to gut feel on which company they would choose to take a stake in or short. He retired early because he said he destroyed his gut biome. He couldn't eat anything for a year but rice after retiring. So, emotion runs deep, all we can do is try to minimize it.

https://academic.oup.com/nutritionreviews/article/76/7/481/4985887
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Yikes! Did he get a parasite?
 
So getting back to my original post. I get an A+ for today. My system gave zero entry signals so I mAde no trades. This is huge progress. Many mAny times in past I would say “close enough” and hit go. I don’t remember the last time I was live all session and took no trades. The thing is that I didn’t feel that urge to make something happen. I’m very proud of that.
 
John9999 said:
So getting back to my original post. I get an A+ for today. My system gave zero entry signals so I mAde no trades. This is huge progress. Many mAny times in past I would say “close enough” and hit go. I don’t remember the last time I was live all session and took no trades. The thing is that I didn’t feel that urge to make something happen. I’m very proud of that.
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Congrat!
That's really good, you didn't lose any money today.
Next step is to trade while still not losing money.
It's Friday, markets are closed tomorrow, meaning at least 2 days in a row without losing.
 
Deviating from one's plan happens to everyone from time to time and the reaction is always pretty much the same, but the only thing you can do is accept it and try to move on while resolving to avoid that in the future. I do that, up until the next time I deviate from my trading plan. :(
 
I dont see anything terrible in the fact that we sometimes deviate from the plan, we are all human and can not function as programmed robots
 
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