I struggled with this again and again and again, to the point I wondered if I suffered from some mental defect.
I knew that not following the rules was the cause of poor trading results, but the root cause of not following the rules was something you nailed in your earlier post:
"...as I watched price gyrate upwards I was about to leave my stop alone as by that time it was clear that the big downmove was due anytime..."
I think it was second or third time through Trading in the Zone that I awakened to the root cause of all the other trading issues: It was an overpowering belief that I knew what price was going to do next. I realized that the only reason I would hesitate to trade a signal, or jump in too early, or chase a trade after the planned entry was left in the dust, or move a stop, was that I personally believed I knew what was going to happen next.
If you break a rule and have a positive result, it's dangerous because it reinforces a belief that you can psychically predict individual outcomes from a series of randomly distributed results.
If you break a rule and have a negative result, it's dangerous because you're prone to allow previous results to influence your subsequent trades.
So I think you're on target that breaking the rules is the root cause of negative overall $$ results, but the belief that you need to deactivate and replace before you can more comfortably follow your rules is the belief that you can predict the outcome of an individual trade, the belief that you know what's going to happen next.
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Prologue: My 'problem'; which I am actively working on in this combine
Although the cheetah is the fastest animal in the world and can catch any animal on the plains, it will wait until it is absolutely sure it can catch it’s prey. It may hide in the bush for a week, waiting for just the right moment. It will wait for a baby antelope, and not just any baby antelope, but preferably also one that is sick or lame. Only then, when there is no chance it can lose its prey, does it attack. That, to me, is the epitome of professional trading.”- Mark Weinstein
A cheetah will sit and hide in a bush waiting patiently for its prey. It may see a strong juicy meal run by and be tempted to jump at it, but instead it waits for a weak, sick, or lame animal to pounce on and guaranteed to enjoy its long awaited meal. The cheetah understands probability innately and uses its instinct to guarantee a kill rather than chance, chasing after something that it may not enjoy the benefits of and expend energy that it cannot afford to lose since it is already hungry. It does not listen to its emotion of feeling hunger and lunging after the first piece of meat. Trading is no different. If you force yourself into the market because of the temptation of making a profit, at some point you will not be able to afford another loss, as you do not have a specific plan with rules that constitute a trading system, there will be more losses than wins eventually.
Last edited by iqgod; April 17th, 2013 at 02:08 AM.
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Great analogy, Iqgod, but we shall remember that trading is about probabilities, we cannot be sure like cheetah, even if we wait patiently for the best of best setups. Losses will still happen, and they are price to pay, like business expenses.
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“I just wait until there is money lying in the comer, and all I have to do is go over there and pick it up.”
As a humble trader, I am trying to go the same path - until I am so sure of a trade being as easy as picking money off the floor I do nothing.
Now is this a:
You decide dear reader! For me it is a Plan.
The waiting part is now under control. Earlier I used to JUMP in within FIVE MINUTES of opening the platform! Juicy Trade! JUMP! Then tackle with managing it for the next two hours LOL and I would end up with a large loser held for a large period of time - both BAD for the combine, bad for me.
However there have been so MANY days I wish I had followed @PandaWarrior's advice to the book - set the target and stop and DON'T MESS WITH EITHER.
Still working on it, meanwhile some food for thought offered by my old mentor from sunny Florida - who else but Gary: