In other words, replace discretion with rules for entry, stop loss, profit target based. The more "mechanical" one can make these rules, and the less input from the trader required to manage the trade to completion, the better.
There might be a mental aspect, but it has nothing to do with generating a profit, which is based on knowledge, experience, information, resources, and probability.
Fascinating. Then why isn't the whole world doing what you are doing? And in fact, what are you doing, and can it be done with less than 7-8 figures in an account?
All of those latter things or aspects or variables you mentioned has a direct correlation to Mentality. You can't escape mentality within trading...Mentality/psychology makes or breaks accounts on a daily basis , Just look at the trading journals section of ET. All those paper 'traders' invariably blame themselves, or psychology/mentality. Hindsight...woulda, coulda, shoulda semi-logical reasonings. Trading successfully, the ability to generate fruitful, abundant, perpetual returns, is truly a collective dynamic process...that very few, rare traders ever accomplish. Most traders just bobble up and down, essentially getting nowhere -- if not flat out failing and flailing. I know it. and you know it....for everyone else in between...they are just too proud or in denial. Trading the market will make most people feel...All Shook Up Cocktail, 1988 movie...Tom Cruise's business partner, Bryan Brown, blew his trading account betting everything on commodities. and then blew his brains out in his rich wife's yacht. He claimed his specialty was being able to 'read between the lines' in the financial market.
Sounds like you’re trading wo hardstops and that you could use some practice with wash trades. Best to practice as a drill prior to implementing live for it takes a bit to fully understand and incorporate into sports memory. The basic idea is to have definable reference points of price relative to one’s entry. If price isn’t moving as one expected quickly, then the if1 flag is triggered as price moves against the prior bar’s close, this is a head’s up. If2 is triggered by price moving against the prior bar’s high (short) or low (long) then the current entry is invalid and take timely appropriate action. You’ll have to play with timescales for to do this on the 5m requires a lot of concentration, focus and creates a lot of small losses until one figures out how to filter some signals and amplify others. There’s the shared range between high volatility bars that can best be described as congestion. This area will make the concept of if1/if2 apa seem like a very bad idea. As with all chart reading on fast timescales, to see inside the current bar / inside the market requires monitoring the DOM and T&S. The exercise will demonstrate how accurate one’s entries are and how often they are not. Even if price eventually goes in the original direction, refining one’s timing imho is what intraday trading is all about. This is the thought to isolate “Hold and it will come back my way.” If your methodology isn’t signaling why that thought is true, then this is the trap of random reward. In the timing of a cycle, there’s early, on-time and late. For more details, search Jack Hershey’s if1/if2 APA. In and of itself, it’s a very small piece of a comprehensive methodology and has limitations when used in isolation. However as an exercise, it’s valuable in training oneself to accept losses much smaller than they otherwise would have been when one is on the wrong side of the market. HTH
no, discretion still there , because regardless of how many rule one has , one has to decide which rule(s) should apply in current situation, especially if its a complicated situation when several rules coincide
The inability to accept losses that encourages a small loss to grow into a big loss along with ending the cycle of blowing out trading accounts is only an issue for discretionary traders or any other type of traders when they don't use a stop. Solution: Start using stops Yet, if your trade strategy and trading plan has been backtested...you should know what your trading results are with stops versus without stops. Using that info should "encourage" you to do one and not the other. Your ability to follow that trading plan with the results of your backtesting will let you know if you have discipline problems. If you have discipline problems...its psychological. wrbtrader
You can be a discretionary trader that uses a rule base trade method. On the flip side...you can be a discretionary trader with no rules or very little rules. I define a discretionary trader as someone that is not 100% automated. wrbtrader
Yep, his is one of my go to statement that I use to filter out who the newbs are. It's counter intuitive. But if you understand how market fundamental works then you would understand why it's b.s.
I understand what you are saying. I believe I trade with no discretion. I have few exceptions, themselves well-defined with rules. For example, suppose my set up appears and signals a short trade. However, the trend has changed from down to up. I now do not take that short trade. This requires one to define trend and trend change with sufficient rigor as to allow for rules associated with the phenomena. The more exact one can be in defining all those apsects of price action that pertain to one's defined trading conditions, the closer one can get to eliminating discretion with rules, imho. Any disagreement between you and I on this matter is simply one of semantics. You define a discretionary trader as someone who is not 100% automated. I would define a discretionary trader as someone whose set ups and trade management were open to change based not on precise rules, but on what the trader thinks he or she "sees" or "feels" at the time. A more helpful way would be to perhaps consider there to be a continuum where full discretion is on one end (no rules, no defined set ups, no money management or trade management algorithms), and complete rule based on the other. My point in my original response was simply that someone who is suffering as the OP is would likely benefit from moving as far from the discretionary side and as close to the rule based side as possible.