I may have mentioned before that there is great value in having a clearly defined set of trading rules. Creating a set of rules that places the probability of success in your favour is a challenge in itself, although once you have designed a system that allows you to consistently make money over time, sticking to that system - or set of rules - is the next challenge.
Lately the market has been somewhat unkind to me and I've been watching profits that took a long time to make erode away bit by bit over the last two or so months. It's not the end of the world if I think about it, although it's still not a great feeling. I've been tempted to gear a lot more than what my rules allow in order to quickly make back that which I've given away, and I've been tempted to just get out in order to take the intolerable pain of losing away. Luckily I've been through this song and dance before and I know that both of those, essentially irrational, courses of action would lead only to more loses. The challenge I have been facing over the last few weeks is simply to stick to the plan.
Currently my plan calls for some really advanced hand sitting to take place. I am in position and waiting for the market to give me a signal to either start selling or to start bargain hunting. Neither of these two will happen any time soon though I suspect. None the less, sitting on my hands and doing nothing is proving to be a great challenge. I feel that I need to be active and trading and doing something. My rules are telling me though that I need to be waiting and allowing the market to unfold, to give my trades the time and room they need to play out. I am conflicted with pangs of fear about "what if this is it?", and traces of arrogance around "don't be an idiot, you should be buying". It's a strange and confusing place to be. And this is exactly why rules are so important.
My focus is to stay disciplined and to stick to my rules. The last time the market pulled back like this I gave in to fear and liquidated literally the day before the recovery and subsequent push to new highs. I allowed my own fear and the constant stream of news-noise to take me out of the market right when my rules told me to wait.
See, it's easy to stick to the rules when things are going well and every trade is a winner. It is when things are not going so well that the rules become harder to follow. Take a trade, stop out; take a trade, stop out; take a trade, do nothing. It's tough on the soul. I know that I still have a lot to learn, but I think the difference between those traders who make it and those who don't, is that those who make it over the long term are able to stay disciplined enough to stick to their plan through good times and bad.
I know times have been tough recently, but I've seen my rules work in the past and I know that they will work against. All I need to do is to give them a chance to prove that, again. Easier said than done, but this has been on my list of things to improve on for some time and if there ever was a chance to practice this skill, the time is now.
@TraderPetri
25 June 2015
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