Strategy – check! Self Discipline.. Erm… No…

So apart from the obvious requirement to have a strategy… see the post here you also need to be able to follow it…

This morning saw an exercise in futility and the emotional take over of my trading resulting in some truly crappy trades. I’m effectively way too embarrassed to post these up here in detail but after some soul searching and a protracted quest in search of a silver lining to the day a few themes have emerged.

Having a strategy is not enough

Great, you at least have a fighting chance that something you have discovered will work… not actually sticking to it’s entry rules and pre-empting the exact point at which you want to enter a trade will more than likely get you killed though.

So lets say I have a strategy that is ‘right’ 50% of the time (guess) but due to faulty psychology I only execute it correctly about 60% of the time. Now you’ve got something that only works 30% of the time… i.e. it’s unlikely to work on aggregate.

Today was an excellent learning example of getting over excited (emotional) and entering two trades early when the conditions were not confirmed. Nuts. I think greed and a vision of financial ease and contentment over-rode my good sense.

Think poker player, think ice cool, think like a general. Do not think like a ego driven fool. Do not dream or fantasize when trading. Manage risk, watch your own decision making, check your ego in at the door. Pay attention.

Forgetting earlier context/learning

I’ve written previously about the importance of levels and that being aware of them can really help put the rest of the market in your favour. Effectively I got slightly deluded and adopted the mistaken belief that I’d found the silver bullet with my strategy. I forgot to stack all the cards in my favour…

How can a bunch of moving lines predict price? Well, they can’t. They can make it clear in a more obvious sense what is happening and help trigger an exit or pare losses but it’s the context of the price in relation to previous levels that’s really key. Previous winning trades have been solely based on this idea. Today’s terribly optimistic punts didn’t pay attention to this. Doh!

I got blinded by indicator madness again. Back to the drawing board. Risk managed decisions on entry based on trends and levels. Everything else is window dressing and gets in the way of the thinking.

Patience Mr Bond…

Yep, I haz not enough of this. Again, previous successful trades were across multi-day time frames although using 1hr charts for an entry point. Place trade and sit on hands plus do NOT re-examine the trade on a lower time-frame…

Don’t get all emotional, just don’t

Getting all emotional means you really do stupid s**t. Like decide you’ve made a horrible, terrible mistake, cancel the trade and then place another one in exactly the opposite direction. This is also known as ‘trading like a 13 year old’… i.e. all hormones and no sense. Also led (on this occasion) to me pressing the buttons in the wrong order and entering a trade in the wrong direction.

Only sensible trade of the day…

I’m long gold. I’m prepared to wait for this to come good. Stop is below 1490.


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