Accountability is a great motivator that has a way of sobering one up and helping him keep focused on what's important. Whoever you are accountable to probably wants you to do very, very well, maybe even more so than you yourself do. 'Working' for that one instead of for yourself is also a cure for selfishness, which, among many other things, breeds myopia. I can't help thinking that, based on the comments of the Master, he is saying to his traders, "Go for it, do your best! I want you to succeed." <a href="http://www.emmanuel.kiev.ua/Kids/Color1E.html">Source.</a>
Best trader I know trades out of his home. He has several high net worth individuals and has dicretionary trading accounts in their names. He doesn;t trade his own money at all. He only trades the s&p minis, and his returns over the past several years have ranged from a low of 30%+ to over 300% last year. He has always been biased to the downside, so that helped big time when his time came. He takes a small one time management fee, and 20% of the profits. I wish I knew how he does what he does. But he is very secretive about his trading style and strategies. Only reason he disclosed his returns to me is he wants me to raise more money for him. He has non-disclosure agreements with his clients, so he can't show his track record. All he can do is make his pitch and then show results with initial investments that lead to bigger investments after a short time. He too has expressed his belief in "accountability" and truly feels he could not get the results he has achieved if not for this. His money goes in the bank.
In particular I second your opinion on being able to justify every entry and especially every exit. In order to get this down, every night I print out 2 minute charts of the stocks I traded that day and paper trade them (after the fact) and then compare that to my actual trading during the day. The results are eye opening. I see a wide gulf betwen what I believe I would have traded by looking at the hard copy printout for the day versus what I actually traded that day. Some of it is explainable by the fact that you have all kinds of time and no stress when looking at hard copy charts after the close versus the frenetic reality of live trading. More importantly though, I seem to violate the rule of "cut short your losses and let your winners run" all the time despite the fact that I've heard this a thousand times! One's emotions tend to make you jump out with a small gain for no reason. A much bigger gain was on the table and there was no real reason to exit. Today 7/3 was a great case in point. I traded HET (Harrah's) short (around 10.05 am) and made about 50 cents per share. There was easily over a $1 in that trade before the intra-day trend changed and no wiggle-out point before the trend change. I just grabbed my 50 cents and watched the stock get "walked down" another 90 cents. Nice point, well put and appreciated. Frank at Bright (NYC)
"In order to get this down, every night I print out 2 minute charts of the stocks I traded that day and paper trade them (after the fact) and then compare that to my actual trading during the day. " That's an absolute non-sense. Paper trading has some limited value but at least you have to do it real time. Still most people will find the way to kid themselves. To grab a chart and think here I would do this and then I would do that. I would call this a masturbation not a paper trading.
Just a quick note. It's probably much easier to delude yourself in this business than in any other endeavor.
Deluding yourself... Yes, but you won't get away with it for anywhere near as long (unless you are taking OPM). **** I think fkeane's idea is sound. It's like reviewing your plays on video after a game. It's not 'paper trading' in the usual sense of the term. What he's saying is, 'hey, that looks like something I would have held. Why didn't I?', or, 'man, I thought that little twitch was the end of the world. It was nothing.' Once in a while I will use the 'scroll' feature of a chart to scroll through the tick chart for a day and sort of 'relive' a trade; it can help you recall your emotions during the trade so that next time those emotions come on, you can recognize them and prevent them from overriding your rational decision maker.