Don't I know it. I sat down thinking it would take me 1/2 an hour or so 15 years ago. A couple weeks later I had a draft. It's still a work in progress although Write it down so a six year old could follow your process. Step by step in the order you chose what to trade, when to trade, how much to trade and when to exit. Break each choice down into what criteria you use to make the choice, a check list that has to be met before you move onto the next part of the process. Writing it down might even help you understand and streamline your own process.
What you say is pure theoretical, not my reality. I think I understand part of what @TripleJs is telling. I have a number of basic rules that I can write down. But I also have a number of logical rules that I cannot write down as they are too numerous (probably dozens if not hundreds) and depending of specific situations. That is the discretionary part of my strategy. I tried several times to write them down too, but ended up with thousands of combinations that each had a different result. It is impossible to explain in a way that people who have not that "problem" can understand it. The best way to compare the not written down, but logical, rules is to compare it to basic math. We all know that 1+1 equals 2, we also know that if we add each time 1, the result will each time be one higher. Pure logic. If I get to the discretionary part of my trading, I use similar rules except in a much broader way. Instead of writing down thousands of potential situation, I try to use a logical system to get the correct answer. If I would have to write down all the rules, I might have to do like this: 1+1=2 2+1=3 5+2=7 124-3=121 2*4=8 14:2=7 etc... So I should write down and memorize all these (millions) lines? By using logic I replace all these lines by a logical system. In this case a mathematical, which is easy. Pattern recognition is far more complex. Took me years before I could use it, especially because you have to be fast, many times a matter of seconds (in daytrading). Another, maybe better, example is: You want to teach your child to drive a car. Can you write down all the possible situations that can happen when you drive a car, and the appropriate action to take? No, you cannot as there are millions, but an experienced driver knows for each situation in general what to do without writing down all the rules. Extensive, intensive and long time (sometimes years) of training the brain, replaces the writing down of rules that cannot be written down. If you use differen timeframes with in each timeframe a few indicators, and for each indicator a rule for long, short or neutral, you can have millions of combinations. Good luck in trying to put that in rules. And then trying to handle that list fast enough to be able to trade it. And if you want confirmation from each timeframe, you might even get no signals at all as there are not much moments that all timeframes generate the same signal at the same time. So how close should you be to that point? Again millions of different, almost, signals. Which one are good and which are not? You can be busy till eternity.
I prefer to look at it this way, if you can not backtest your trade strategy even manually nor maintain any quantitative statistical analysis of your real trade performance (most brokers have basic statistical analysis tools embedded in their trade execution platform that does it for you after each trade)... It's a trader that has increased the probability they will not be a successful trader. A trader that you've described (only able to memorize some things but not everything) is a trader that must be dependent upon statistical analysis (backtest, real trade performance) to help them understand their trade strategy and what to do / not to do in certain trading situations. This will also impact the understanding of the risk management involving a trade method. For example, I knew a guy that made all his money trading Emini Futures in the morning trading session and then consistently lost it all in the afternoon trading session. His trade method is something you've described...he knew the basic details (wrote down the basic details) but not able to write down a complete trading plan because it is too complex. Yet, he ignored the basic statistical analysis of his trading that would have easily revealed to stop trading by 1130am even though he was using a very complex trade method. He no longer trades because he never backtested his trade method and did not understand the statistical analysis of his real money trade performance. Simply, he did not know what was his edge even though any unbias person could easily tell him to stop trading by 1130am... Consistently resulting in him panicking / stressed in the afternoon trading session as his profits begin to slip away until he was in the red by end of the day. wrbtrader
Difficult to know for sure. Trading and traders can't be placed inside a square box of theories. I created an algo maybe 3 years ago via an experiment, which in theory I believed had logic. Remember, it was an experiment.... Well 9 months later I was licking my wounds with heavy losses. I couldn't backtest due to the difficulty in logistics of getting all the required data into a computer, several sources of data. Then what I did was stopped trading for 3 months and mulled over it but continuing to monitor in order to work out why my 'logical theory' wasn't working. Then I began trading again because I continued to believe in the logic, same algo just more heavily filtered, it has gone well since, except for a hiccup with several gold positions which are now coming right. Sometimes it impossible to backtest and because of that, the method may still work out.
Yet, you can still do statistical analysis of your real trade performance. My point, a trader needs statistical analysis via either the backtest / real trade performance or both. wrbtrader
The problem with that theory, mkts ebb and flow, forever morphing, sometimes there could be months or however long the mks don't behave. For example taking bitcoin atm, it is having a hissy fit for the longs.
I don't trade Bitcoins nor know much about it. Yet, if you can Short Bitcoins...you would have done very well the month of May. Thus, to someone that's Shorting Bitcoins...the markets is behaving right via their perspective. In contrast, to someone that's Long Bitcoins...the markets are not behaving the way they like to see it behave in the month of May. Just as interesting, if you're Long Bitcoins since 9:45pm May 29th until early this morning of 4am May 30th...you're doing well. My point, access to basic statistics would reveal such about your trading of Bitcoins if you traded in the above mentioned time periods. Just as importantly, the fact that you mention basic info about Bitcoins ATM (e.g. bitcoin atm, it is having a hissy fit for the longs) implies you at least have some basic statistical analysis information. wrbtrader
All I saying is write down the process. Write down the rules that are fixed. When you get to the math part say "use math". Recognizing patterns is similar to driving a car; the more you look the more you see and understand. But the rules are not about patterns they are about the process you go thru to determine if that pattern is viable at that time. More important is your process for managing the trade once you are in it. Knowing that regardless of the entry, the trade may not work out, where will you exit. I reiterate; A losing trade is not a bad trade if you follow your plan. It's a good trade with a bad outcome!!
yea, it is much easier to quantify system on one timeframe, it is hard when I trade price pattern with different timeframe. It really just come down to experience. But as ET trader say, I need to have a trading manual, and try to stick to it which is what I am very bad at right now, discipline. I now seem to know my main problem, I have PTSD, because my early trading experience too much trade stopped me out and when to my original desired direction and went to the moon (like when I shorted oil in the 60s, got stopped out on friday before a big gap down on monday and it went to negative, and when I long goal in the 1600s stoped me out and went to 2000). So now I am so afraid of missing out, and want to stay in the market all the time, my mind want to avoid this kind of pain happening again(missing the homerun trade). Having a plan would help a little but my mind is the main issue.