Develop and follow a written trading plan

Discussion in 'Trading' started by Chuck Krug, Feb 20, 2018.

  1. southall


    My trading plan is written in software code.
    From which markets to trade, what entry and exits to use, how to pyramid, how to position size etc

    I suppose if you are not fully automated then a written plan would be a good idea.
    Spectre2007 likes this.
  2. tomorton


    Three of the scariest words in trading - discretionary, gut, feeling.

    Funnily, they don't come up much in trading plans.
    tommcginnis likes this.
  3. wrbtrader


    Discretionary trading can also just mean you're not "automated" or not using codes.

    Thus, a trader with a written trading plan can still be a discretionary trader because trading (when to enter and when to exit) is still at the "discretion" of the trader.

    For example, a trader that outperforms in the morning session but tends to lose in the afternoon session...that trader can use discretion and just not trade the afternoon trading session anymore while knowing he/she is still seeing valid trade signals via the written trading plan.

    Also, I put gut or feeling or emotional type of traders in the category called intuition traders.

    Yet, I've seen many times the words intuition & discretionary embedded together.

    Using the same example above when a trader is using discretion to avoid time periods that they statistically tend to lose it intuition or discretionary if they have statistical proof that the afternoon trading session is a losing duration for them...resulting in them deciding to ignore (avoid) valid trade signals that appear in the afternoon trading session ???

    I just use a simple definition...if you're not're discretionary.

    Regardless, anyone can develop a trading plan. The hard part for most is to apply it and then continue following it when losses show up.

    Just remember, even a written trading plan can be backtested (manually) prior to any simulation/real money trading.

    Last edited: Feb 20, 2018
  4. jinxu



    If intuition and discretionary are basically the same definition. Then linear and systematic are the other side. I see a lot of linear type trader on ET. If I was to guess they are the majority. You can tell who's a linear type of thinker by the type of advice they gravitate to.

    Also intuition is not emotional. Intuition is being able to connect two unrelated dots together without having to go into the linear process type of thinking to reach the same conclusion.

    Read above again. You probably miss the main point I was trying to make. I said most trader are linear type thinker. Therefore most advice you get are from linear type thinker.
    Last edited: Feb 20, 2018
    lovethetrade likes this.
  5. tomorton


    I don't go along with this.

    Gut, feeling, intuition and discretion are emotional responses to a situation. Along with a feeling in your water, or a vision, or that strange ache in the upper stomach when you're about to do something risky which you didn't think was risky. But if you can define the factors that cause you to have a feeling or intuition, these should be incorporated into a trading plan. This will ensure appropriate weight given to each factor, continuous regard to the correct factors, long-term elimination of irrelevant factors, the avoidance of self-imposed and in the end emotional trading practices such as revenge, trading to not lose, profit per day target etc.

    Not convinced? Imagine you had to convince an investor before you take the trade. You might say, "I just have a feeling this will work". Not good enough for most lenders.

    As for stopping trading because you're having losers - this is just admission that you have a plan dependent on emotional execution or good luck.

    Also, the opposite of automated is manual, not discretionary. Whereas the opposite of planned is random.
    murray t turtle likes this.
  6. tomorton


    Intuition is not joining two dots to make a line, that is logic. Intuition is taking one dot and making a line. Discretion is making a line out of "some" dots.
    rb7 likes this.
  7. Peter10


    that is the key to emotionless trading
  8. jinxu


    This is so very wrong:

    murray t turtle likes this.
  9. tomorton


    Its very wrong in trading.
    #10     Feb 20, 2018
    cvds16 likes this.