You already know what I'm about to say. C'mon, we've been through this before. Train yourself like an assassin. A trained killer does not pause in front of his or her victims nor does s/he rationalize when s/he fucks up. Start treating yourself as la femme fatale. Enough said.
I've had losing days when I didn't make any trading mistakes, so I don't think you can entirely eliminate them. Also, I haven't met a trader who never made any mistakes.
I agree with this, good point! I've found that not taking signals is because of lack of confidence in the setup or strategy. If you aren't fully confident about the setup, then it's usually because it doesn't fit all the criteria for entry. Easy decision then, just don't take the trade. If you aren't fully confident about a strategy, then it means you haven't fully worked out and tested the strategy, and don't have enough experience with it. Maybe you saw it work a few times, but haven't rigorously tested it on paper and then with small size in real-time. Solution - test and experiment more with small size until your confidence increases based on good results. Maybe you are concerned about some other risk (e.g. maybe the signal is generated as the market is collapsing on news, and you are scared the collapse will accelerate) - this just means you haven't traded it enough where that risk was present, so you don't know if the signal/strategy is valid under those conditions. Basically if you are hesitating on trades it's because you don't *know* how to trade that approach. You just have an idea of how it can be traded, but you aren't certain that this is the way to trade it. I.e. inexperience, lack of testing, lack of proof that it works. And how can you have confidence without experience, and without proof that it is sound? It would be totally irrational to be confident without those factors. To use an analogy, think of a mid-level poker player who sees an opportunity to run a huge all-in bluff on the final round of betting. He is paralyzed by uncertainty because he is not sure whether it will work or not. Compare that to a veteran pro who has done this move 100s of times and knows that 70% of the time it will work. The veteran has an easy decision because he has the data, the proof that it is a winning odds play, so he makes the bluff effortlessly and automatically. The mid-level player hesitates, and even if he decides to run the bluff, there's a good chance he screws up the execution by looking nervous or hesitant. Ditto for the trader without experience at that strategy - even if you take the signal, you will probably exit too soon or set your stop too close or get freaked out by the first pullback if you don't have enough conviction in the signal. There is no "magic bullet" to generate confidence. Confidence isn't a magical quality that you just will into existence. Rather, it is generated by knowledge, experience, testing, proof. The solution then is to do what it takes to have conviction in the decision, which is to research the heck out of it, then get experience at it whilst trading it on small size, until you see it working.
Athletes improve most effectively by training, not by competing. You will hardly find a single top athlete who does not have a trainer. Chess or poker players find improvement comes in analyzing games/hands *afterwards*, not by partaking in competitive play. It's no different for traders. If you don't train your discipline or other trader skills, you won't improve them. Ideally you should spend more time analyzing your trades than you do actually trading. That may be hard for a daytrader, but at a minimum you should be analyzing each day's trades at the end of a session until you have completed that analysis for every trade you took or signal you didn't take. Then more work on potential new signals or patterns or observations that appeared that day.
The thing is, discretionary trading implies you're making a judgment call as to the validity of a given trade. The context for every trade is different, and the discretionary trader's edge is that you don't take every last entry signal like a machine. Obviously this means that you'll make mistakes but on other occasions save yourself from losses. If you traded like a machine then it wouldn't be discretionary trading, but rather mechanical (not necessarily automated) trading. If you have an edge that can be applied mechanically with 100% objective criteria, then there is indeed no excuse for picking and choosing. Just stop it, as they say... It's just a matter of deciding (or realizing) which side of the fence you're on and rolling with it.
NoDoji Iâm in the camp with Art Deco, Schizo (la femme fatale) and Ghost, test, test, test. I especially took note of this comment from Ghostâ¦. {{Maybe you are concerned about some other risk (e.g. maybe the signal is generated as the market is collapsing on news, and you are scared the collapse will accelerate) - this just means you haven't traded it enough where that risk was present, so you don't know if the signal/strategy is valid under those conditions.}} This is HUGE and I thank Ghost for sharing. When back testing an edge Iâm never sure of how news may have influenced my P/L results. This may help with: 3. Having a bias based on news or S/R levels I broke my bad habit of bringing my "bias" into the trading day years ago. Here's how I did it. Every morning I wrote my bias on a full sheet of paper, and then I crinkled it up into a ball and shoved it up my ass! Within six months to a year, the discomfort of having my "bias" up my rectum taught me to stop forming a "bias." I seemed to be much more relaxed with my trading after that issue, "passed." I know it isnât very âsexyâ but it worked for me. Maybe an octopus is more your style. ) http://www.guardian.co.uk/football/2010/jul/08/soccer-octopus-world-cup-final <*)))><
when i was making Adult movies, at least i was consistently paid,not alot,but a steady pay check nonetheless. trading is much different and i am still learning that consistency is key.
It's impossible to never violate the any of the rules you've mentioned as a discretionary trader. Thus, to do such you'll need a 100% automated trading system. Simply, as a discretionary trader you will never be a perfect trader nor should that be a goal. Instead, the goal is to first recognize your weakness and then learn to manage it so that you can minimize it's impact. That's reality via recognizing the problems as it is occurring in real-time (not hindsight) and than taking action to minimize its impact on your trading day. In contrast, it's lost time/energy for a discretionary trader to attempt to act like a automated trading system nor is it reality that such will be successful. Mark
nodoji, this has been mentioned already and it's something i continue to experiment with in my trading. i.e. to trade very small size. doing this gives me no excuses to not take every signal that the market gives that are consistent with my rules. in your case, perhaps you could try reducing size (by 1/2, 1/3, 1/4, etc) for those trades you are not comfortable trading with full size. i know this is a compromise but it's a step in the right direction. you will be trading every signal but you will still be picking and choosing those trades you want to enter with reduced size. p.s. thank you for everything you have shared in your posts.