Why I Could Not Stick To A Trading Plan?

littl121 post on June 11th, 2018
Posted in Trading

Whilst drawing up the trading plans I analyzed edges, key price levels, expected profits/losses, trade management, probabilities etc.  After the trade has been executed, I became obsessed with the P/L (profits and losses).

Traders  who focus on the P/L will likely swing with changing short term accounts of the market environment. They will lose focus of the overall picture and edge they had gone in with.   Their minds dance to the rhythm of the marketplace, and the beats drown out the rationale of their original trade. They build a case to sabotage themselves and toy with  tactical decisions that run contrary to the original plan.  This is particularly true of resourceful traders who possess agile mindsets and analyse how markets constantly operate.  They become entangled with trade management issues during the trade.

Trade management should be part of the earlier trading plan, not created during the trade, and only touched on when key points of the plan are materially affected.    Addendum frustrations, and emotions like greed and unwillingness to end the day with a loss etc change their views of the original trade.   They become stressed, and lose the consistency of looking through the same lens they had used for making the earlier trading plan.   A wise trader once shared “we act to reduce our distress rather than maximize our opportunity”

The perspective I had whilst developing my trading plans was different from what I became engrossed with after trade execution.  Changing that was monumental in helping me turn the corner.

 


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