The problem is that our brain evaluates dynamic graphical models by the left right hemisphere, and makes decisions by the right hemisphere. The perception of the left hemisphere is strongly influenced by neurotransmitters (dopamine, cortisol, etc.). Only the right hemisphere can calm the limbic system. For this, the right hemisphere needs a clear logic and decision-making algorithm. This algorithm should be confirmed by a statistical series of transactions. 500-1000 transactions made according to one template! The brain needs a binary evaluation criterion - whether it made the right decision or not. Correctness does not depend on the outcome of the transaction. Our brain cannot work with long statistical series; it gives more weight to more emotional events. Without a statistically validated algorithm, trading is pointless. How many template transactions are needed to achieve your goal? 500? 1000? 10000? With the left brain, you will not do this series. This can only be done with the right hemisphere. Now you see the problem in self-discipline. But this is a mistake. Self-discipline occurs automatically when your brain is confident that what it does will lead it to a given goal. Self-discipline for the brain is a procedure for reducing energy costs. Now the brain needs to be given a clear decision-making algorithm with unambiguous criteria. The first step is to create such an algorithm. The second step is to create the habit of its fulfillment. First a scientist, then a soldier. The algorithm creates the right hemisphere. For its normal operation, there must be a normal chemical composition of the blood. Therefore, it is better to create an algorithm on a demo account or paper. In this case, you will spend only one resource - time. If you create an algorithm in a real account, then you will not only spend money, but also will not create an algorithm because of unhealthy emotions. In order not to create bad reflex arcs and muscle memory, I recommend not trading on a demo account, but keeping statistics on paper. I recommend the following steps: 1. Create an algorithm by making paper records. 2. Trade this algorithm on a demo account. 3. Real trading. I ask you to understand that there is a specificity of the human device. Do not burn money - they will still be useful to you.
I do believe this is the key to overcoming my struggles: "Now the brain needs to be given a clear decision-making algorithm with unambiguous criteria. The first step is to create such an algorithm. The second step is to create the habit of its fulfillment." I spent some time going over my trades and the entry criteria that I have and found that my problem is that ALL of it is subjective. Every time I found an entry point that was in agreement with my entry criteria, I could find places where it worked and where it didn't. However, it's a system that does have a lot of potential if I can find a way to trade it where there is little room for more than one interpretation. What I think I can focus on in the "scientist" realm is determining when to stay out and set some more rules to help with that. It was really helpful to think through the things your wrote. Thank you!
I'm continuing to trade in demo. I have a method I'm trying to get better at and I'd rather not waste money getting better in live trading. However, I'm also studying the charts apart from trading, trying to find ways of improving. Yesterday I took 4 losing trades and 2 winning trades in my demo account. Spent a lot of time analyzing the trades. Did not trade live.
Today was finally a better day. 1 loser and 3 winners in demo account. 1 loser in the live account. BUT, I stuck to my plan and did not take another trade. This was REALLY hard because the move I wanted to be in was just after I got out, and I took it in the demo account. It had 27 ticks of trade potential. Even though I might have been able to get in and trail to get 20 ticks for it, it's more important to be careful to follow the predetermined plan and be self-controlled as a trader. I passed day one of following my rules in my live account. Yay!!! Tomorrow will be another test.
No trades today in the demo or live account. I worked on studying the price movement instead. My demo statistics have slipped a lot. This week I had a 58% win-rate with 7 winning trades and 5 losing trades and made $60 after commissions. The net profit in the account since changing my rules on November 19 is $495, which is what it was 2 weeks ago, but last week I was down a bit and this week made it back. The win-rate since Nov 19 has dropped to 64%. In the live account the statistics don't mean much because I moved the stop loss and take profit sometimes. But this week I had 8 winning trades and 27 losing trades with a win rate of 22%. I had 14 losing trades in a row if you count the end of trading on Monday and the beginning of trading on Tuesday. What went wrong? Mostly I re-entered immediately after taking a losing trade, not realizing that the reason it lost was because price wasn't doing what I thought it would do. What would have prevented this was waiting until I saw price action to validate the trade idea. Instead, I look at my trades and see emotional trading that led to misreading the chart, trying to justify a trade entry that shouldn't have been taken. What's scary about this is that there will be much more pressure if I ever trade a full contract. If there is a way to overcome this, I need to find it and get to the place where it will not affect my trading. If I can't overcome this, I need to give up on trading. I'm hoping if I can see the danger of emotional trading for the harm that it can do, that it has the ability to completely destroy an account and perhaps even the ability to continue to trade, that I will heed the warnings enough to develop protective guidelines that I will follow and prevent loss of self-control. And that is why I have a new perspective on trading in my live account. The primary goal is to trade responsibly and following the rules. I'm undecided as to whether or not I will adjust my SL and TP in the live account. It helps me know how I'm doing trade-wise to look at my statistics. Besides, if I really can read the market clearly, then a 10 SL shouldn't be hit very often and that is the goal I'm working toward. So, I may choose to lose $ as trades go against me and get out with only 10 ticks when I would really like to let the trade run. This isn't how I plan to trade in the future, and it may be that I should wait to trade live until I'm in the stage where I can let my trades run. But I think learning the self-discipline of trading live is so important that the benefits to doing it this way are more than the reasons not to. So, what I hope to do, is not hit home runs with my live account, but learn to trade it as I do my demo and if I can learn to do that, I should be making a small profit eventually.
I'm taking a break in my demo and live account until after volume gets back to normal in the NQ. Until then there's plenty to study to try to become more accurate in finding high probability trades.
You are messing up probabilities with trading actions that are focused on being right. Take time to read and digest three books: 12 Habitudes of Highly Successful Traders and Overcoming 7 Deadly Sins of Trading. Then when you area ready... Exceptional Trading: The Mind Game.
I don't know exactly how to respond to what you've said. I went back and re-read your other posts in this journal. The thing is, I do agree with you, somewhat. In a few more months, I plan to be cutting losers quickly and letting winners run. But currently I'm very happy with my plan of 10 ticks SL and 10 ticks TP and being a little obsessed with my win rate. There are some benefits to using this approach as a process of learning to read the small timeframe charts in order to more accurately enter into a longer timeframe trend (1 or 2 hr trend). One of the benefits is that it provides structure to a somewhat unstructured market. It takes away the need to figure out an acceptable SL and TP and instead allows me to focus on recognizing which micro market structures will work for a high probability trade of 10 ticks. The SL is somewhat irrelevant as long as it's not more than 1:1 risk to reward and that is because the goal is to enter so accurately as to not have the trade go against me much at all. I'm striving for less than 4 ticks, and I do, sometimes, get that. If I can reach around a 75% accuracy rate using 10 SL and 10 TP, and do it consistently, it would be a really good skill to have. I could make a living trading doing just this. However, if I could use that skill to enter into some of the 1 to 3 hr trends the NQ does almost everyday, then I would be able to do exactly what you are talking about, cut losers short and let winners run. That's the plan. As far as the books go, I'm too busy trying to tuning my entry criteria (and I think I'm getting somewhere with it). So, the books will need to wait until I'm done with this focus. However, they sound like good books and I do want to eventually read them, so thanks for suggesting them. Thanks for taking the time to share some really good thoughts, but I have a plan I'm working on and need to keep at it. After this, I'm pretty sure the things you've shared will fall into place easily.
Do you find that using candle sticks are very helpful to your research? I myself don't, but only because the bar charts are easier to read. Good luck with your journal