Y:
When I first started posting in this thread, I asked you if you had a well defined trading plan. I asked that question not in a whim but based on the results of your daily PnL you posted. You assured me that you did; and, given this is a journal on psychology, I did not challenge you.
A manual, systematic trader (which you aspire to become) needs a well-defined trading plan
and a mind-set to execute that plan. They are not mutually exclusive; and, they are equally important: no one is more important than the other. In my opinion, you lacked both. You identified the need to better you mind-set, and from what I see you have been very successful in that journey. This journey is far from over; nevertheless, your strides in this area have been impressive. I still owe you the post detailing the last step in the process [a process to better one's mind-set] I laid out, which I will do in due course.
The more pressing issue now, I believe, is your trading plan. Actually, your understanding of price action that is reflected in your trading plan. As I have said elsewhere, for a technical trader, a trading plan should be anchored by her solid understanding of price action. Anything less makes the trading plan almost useless.
Ask yourself the following questions:
(a) Assuming you entered a trade, and have a predetermined profit target level. Can you tell, based on price action (not based on emotions, but based on your analysis of prior price action for similar pattern instances), if the probability of price reaching your profit target is lower/higher than the probability of price not reaching the target?;
(b) Is your planned entry occurring at the lowest possible risk? Note: I said 'planned' entry, not necessarily 'actual' entry;
(c) After entry, even if the price moves in your intended direction, can you tell if the movement has convection or not? (once again, based on your analysis of prior price action for similar pattern instances);
(d) If your profit target is based on changes to market conditions, can you, based on price action, immediately detect those changes? (based on your analysis of prior .....);
(e) Is your methodology for determining anwers to (a)-(d) objective? Definition of objective: Give your methodology to different people and everyone comes up with the same answer.
None of the above questions imply determinism in markets, but provides clarity for application of probabilistic thinking (and methods of statistics should you choose to).
If you answered 'no' to any of these questions, you lack a thorough understanding of price action, and your trading plan can only be half baked. My guess is: you will answer 'no' to all of these questions. You have a set of mechanical entry tactics, but your understanding of price action is lacking. In my opinion, a trader with a solid understanding of price action would not make the statements I quoted above. I could be completely wrong, and you alone know the right answer.
In other words, lets not forget that the edge for a systematic trader is a statistical edge; and, that edge can only be developed based on one's understanding of price action.
Since this is a psychology journal, I will stop here.
All the best.
Regards,
Monoid.
PS: Just to be complete. According to me, a primary difference between a discretionary trader and a systematic trader is that a discretionary trader relys on intuition to trade but a systematic trader relys on a trading plan to trade.
