With rules there is nothing to do.

[Businessman]

Rules are only as good as your discipline to follow them.

After 11 losers in a row (most people lose discipline after 3 losers in a row) or a few months of break even trading (where your equity curve is range bound) you will be very tempted to change your rules.

When things are going well, yes there is nothing to do (why would anyone be tempted to give up on rules that are printing money?)

But when things aren't going well, there is still plenty of do, you have to maintain focus and discipline to stick to your rules and only change them if are very sure they dont work anymore.

 

[WhiteOut56]

People make too much debacle on this emotion / bad habit garage. The truth of the matter is you never even had an edge in the first place

 

[jnbadger]

tallen03, there are some golden nuggets of wisdom in some of these responses. But so far, I have to agree with Handle123. Nothing beats experience.

But if you're new, I don't think there is anything wrong with being purely systematic. Gotta have some sort of a foundation to learn from and build off of, right?

 

[oldtime]

Quote from jnbadger:

tallen03, there are some golden nuggets of wisdom in some of these responses. But so far, I have to agree with Handle123. Nothing beats experience.

But if you're new, I don't think there is anything wrong with being purely systematic. Gotta have some sort of a foundation to learn from and build off of, right?

no kidding when they first invented computers we did all kinds of backtesting. What you looked for was a system that consistently broke even. If one made a lot of money or lost a lot of money it was probably curve fitted and got tossed.

But once you found that system that fit your account and temperment and usually broke even, you could be confident with it.

The funny thing is, almost any system you design will have a projected drawdown of about 30%. But when it hits 20% likety split, one losing trade after the other, you start having doubts.

So what they do is throw in the towel, and think about it and start up a new system. Only this time, the system starts with 20% less than the old system had to work with.

 

[vinc]

Quote from tallen03:

I just finally created rules to my trading plan. Now I have a stop and a target in the market. After hearing it many times at seminars and seeing it in many books(..)

as we all can see now Simons has a tough competion there , some serious rival !

 

[pemully]

Quote from oldtime:

no kidding when they first invented computers we did all kinds of backtesting. What you looked for was a system that consistently broke even. If one made a lot of money or lost a lot of money it was probably curve fitted and got tossed.

But once you found that system that fit your account and temperment and usually broke even, you could be confident with it.

The funny thing is, almost any system you design will have a projected drawdown of about 30%. But when it hits 20% likety split, one losing trade after the other, you start having doubts.

So what they do is throw in the towel, and think about it and start up a new system. Only this time, the system starts with 20% less than the old system had to work with.

lol! I know who you are speaking about

 

[jack hershey]

Quote from Handle123:

I am sorry, but I find this funny to me, it is the difference of someone who is just starting out and one who been trading 34 years. The smallest part of the trade to me is the setup and the other 99% of the trade is managing the trade. There are so many times where you have a target, but the price patterns are SCREAMING for me to get out earlier. The entry is a no brainer, have set rules for that, providing price action says go ahead. And yes, there are times where a retracement happens, but Price Action might show it is a very high risk trade to take. Perhaps Price showing Head/Shoulders setting up or double/triple tops forming, maybe a climatic bar is forming after long run up, all would make me unable to take a signal. And all these price action patterns would also tell me to get out faster than only going for my target.

great post.

This is the explanation of a person repeating 1 years experience 33 times.

See if you can quess what % of the time he is in the market and what % of capital is in a given trade.

Guess what % of the time most of his capital is idle.

The annual ROI may be under 1000%.