I've been honing a list of rules based on a long running analysis of my losing trades/losing days. Though I often have losing trades, I rarely have losing days. In reviewing my losing days over the past year and working on my basic rules over time, I've found that EVERY losing day came down to a violation of one or more of these rules: 1. Picking and choosing trades instead of trading all valid signals. 2. Trading lukewarm setups or chasing entry deep into a move in an attempt to "get back" a move that was missed because of not trading all valid signals without hesitation. (This one directly relates to #1.) 3. Having a bias based on news or S/R levels instead of trading the price action itself. (This often leads to either counter-trend trading or missing the best moves because the bias makes you think price is going the "wrong" way and will reverse at some point.) 4. Cutting winners before target is reached while letting losers go all the way to the stop loss. 5. Counter-trend trading without waiting for a valid reversal signal 6. Not placing stops at the price where the trade would be invalidated (basically placing wide stops that I believe will never be hit). Since every losing day was a result of violating these rules, I'm assuming that if I never violate these rules, I'll never have a losing day (except in the case of a system/platform failure, or a news event causing a halt or gap against a position). At this point in my trading career, the rules I still consistently violate are #1 and #3. Outside of totally automating one's strategy, have any discretionary traders here managed to overcome these issues and simply trade like a machine, following rules for entry, stop and target on every valid signal?
I am a broken record. And you are a scratchy needle. The only way to fix the problems you describe is to codify your systems into sets of clear, simple, unambiguous rules, create algorithms for them, code, backtest and optimize. After you have had some months of stable system performance in testing, you can start eliminating your issues one by one with the systems as disciplinarians. First take only indicated trades, even if you don't take all of them. Then take all of them. Then scruupulously observe your loss stops. Then patiently wait for your profit stops. And don't forget to continuously reoptimize so you can make yourself thoroughly sick realizing how much money you lost by not honoring the system. Each of the issues you listed is a serious psychological problem. But they WILL go away in trading if you are conscientious. Then you have the rest of your existence to worry about. For that there is no cure. Even old age doesn't help, as I am now painfully aware. And stay away from Jack. He will rot your mind by insidiously bathing it in verbal bullshit.
Nodoji, If you dont take all of your signals then there must be something about your setup that you inherently dont trust. What is that thing that you dont trust in your signals?
I'm here. I want to go here. People often ask how I stay so thin: Bar-By-Bar Analysis-Induced Bulimia. We live in separate houses at this point.
When I do bar-by-bar analysis the bars are nice static entities and I'm looking at the chart of my instrument and nothing else. When I evaluate the setups and see the signal bar in real time I look at all kinds of other crap. Holy sh*t, I think you've helped me.
How many times would your winning days be losing days if you took every single signal like a machine?
Losing days are inevitable. Breaking rules and losing emotional control happen on many of my bigger losing days, however small and medium sized losing days are often an inevitable part of trading a real edge. If 4 days you make $500-1000 and 1 day you lose $100-400, all the while trading your setups like a robot, that's IMO just the nature of the business. Following all your rules will decrease the size and frequency of down days, but any good system will inevitably have a down day now and again. Best to just ignore it, learn from it if you missed anything, and move on the next day with a positive and conservative attitude. As far as not taking every trade, that usually comes from realizing that it is possible to take the setups and keep losing, perhaps more than if you didn't trade at all. If we didn't think there was at least a reasonable shot that continuing to take setups on that day would result in an increased drawdown, we would have no problems taking every setup like a machine.
nodoj - if that's your problem, maybe wait til the bar is *almost* complete? that is, for a 5 minute bar, wait til 4:45 or so, make sure it's confirmed, enter? just a thought. i'm discretionary, but i'm definitely NOT a machine. have emotions, and i can't completely suppress them even after many years. i have losing days, but that comes with the territory.