Every journal I've read is: I have no problem following trading rules. None. I'll hold through a fucking -50 tick excursion if my system hasn't told me to close the position yet. Maybe it retraces to -40 and then I get the close position. Oh no, I lost 40 ticks. Boo hoo. At least I followed the rules of my system (if only i had a profitable one). I'm more efficient at it than a blackbox I seriously don't understand how people lose money when they have a system that has been statistically proven to make money over time. Buy or cover signal = press "buy." Sell or short signal = press "sell." Not getting a signal = do nothing. I'm not trying to be a smart ass but I get pissed off reading people's journals. If you're not going to use your profitable system, please give it to me. I'll give you 10% of the profits which is more than you'll make because you lose money by not following rules. edit - for clarity - my opposite problem is that I don't have a winning system but I can follow rules perfectly without emotion.
sounds like a win /win situation to me. Iron has the discipline. Jason has the system. Give Iron your system. He trades it and gives you 10% of the profits. If the system doesn't work Jason gets nothing which is what the system is worth.
Traders trade according to their personality, not their system. The system has to fit the personality of the trader to work, otherwise they will fail. *** You just have to keep working at it ... try to determine whether you like to trade a trending system or a counter-trending, more trading range based system, and then try to build on that knowledge. Best wishes.
this is so stupid. the mkt doesn't care what your personality is. Rather than try to focus on what's your personality is just try to focus on what you'll make you the most $ / risk
i'm going to guess the majority of systems that fail due to trader emotions/lack of discipline aren't profitable systems to begin with. it's easy to curve fit a system or pick up on short term trends in the behaviour of market makers/participants but these don't last. also systems will fail instantly once fundamentals change. only true systems would be arbitrage anyone capable of thinking up such a system would have the skills to program a black box.
I love your post. I absolutely agree. If your system has proven that you have an edge and you trade it according to your systems outputs then you should trade without the slightest sign of stress or fear. THere will be losses but you know that those losses will be cut short and that you will promptly act on your system signaling a stop loss trigger. Losses will eventually be followed by profitable trades which make up more than your losses. In the end it comes down to what drawdowns you want to accept and according to that you set your system. Obviously markets are dynamic and what worked some time may not work in the future. I admit I am a firm believer in trend following systems, not sure yours is one but from your comments it sounds almost like one.
I think there are two main reasons people can't follow a system. One, they underestimate the degree of faith involved. It's one thing to look at a printout of a winning system and see that it produced 10 straight losers at one point, that it generated 30% winning trades and that the bulk of the profits came from a very small number of trades. Those numbers are typical of trend following systems. Actually trading such a system is tough for most people because taking 10 straight losers will have most people chucking the system rather than throwing good money afer bad, most people can't handle the psychological pressure of a small number of winners, and after all those losers, it is awfully hard to let a winning trade play out. This brings us to reason number two. You understand that each trade is basically a coin flip. The probabilities are only slightly in your favor even with a great, robust system. In real time you have the advantage of seeing what is happening, and it is very tempting to believe you can add some value by injecting your understanding of the news, etc. Often you can, but then you're no longer trading a system.
IMHO Their edge isn't based on their own analysis, so they don't trust it to work as much as they would if they put the time and effort into it and could see what the market is telling them. Also, I believe that mental discipline is a huge part of trading and if not addressed no profitable system will save you, simply bc you won't be able to execute. Of course discipline without an edge is equally futile. You need both.