In my a opinion a trader should always take every trade that is confirmed by the rules. How else can we be consistent in our results unless we are first consistent in the execution of our trades?
Consider this quote from Mark Douglas:
"When it comes right down to it, no one trades to lose, no one puts on a trade believing it is going to be a loser, and all systems will definitely have some percentage of losing trades. So it's difficult not to be tempted into trying to guess which ones are going to be losers and not participate.
You need to understand that technical trading systems are not designed to be outguessed. Systems aren't designed to give you isolated signals of an opportunity to be taken when it seems right. What they do is mathematically define, quantify, and categorize past relationships in collective human behavior to give you a statistically probable outcome of the future."
Pipmaster - I hope you don't mind my selectively quoting you and refining your quote from Mark Douglas' book. But to me, these parts are the essence of the ideas ... you have, absolutely, nailed it.
Systems are not there to string us along so that our money lasts longer before we inevitably go down the gurgler. Systems are there because they have already been refined and tweaked to the degree that they are, based on forward testing over time in many market conditions.
And the rules are there BECAUSE of the many market conditions we are likely to encounter. THAT"s why it is a system. We know that most systems can not handle ALL market conditions as they are, so a rule is introduced to accommodate the inconsistencies of the market.
When we speak of being a "disciplined trader" we usually mean having the discipline to take stops, or manage money according to the 2% rule or whatever the prevailing consensus is for sound money and trade management.
That's nice.
But what I think real discipline is, in practice, is an ability to obey unquestioningly.
As such, I would not class "myself" as disciplined. I class myself as a rebel ... someone who doesn't think the rules of the world apply to me.
1)"I" speed when I drive my car, if I think that my speeding does not put others at risk - regardless of the speed limits. Consequently, I have had the odd speeding fine over the years.
2) "I" cheat on my taxes if I think I can nudge the upper limits of claims, without always having receipts for those claims, or the full extent of the amounts claimed as deductions, hoping that I remain under the radar of the computer police who will flag me for an audit if I stray outside the bell curve for my claims.
3) "I" flirt with other women when I think it is cool, and that it is just a little harmless fun, and that I am not really hurting my wife.
4) "I" invest more than my 2% on my trades, thinking that I am a bit smarter and luckier than other traders, and that I will run my account up faster than other traders will. If I stick to the boring 2% rule, which makes my trade size hardly worth the exercise of placing the trade, I will never become financially independent.
I have placed quotation marks around "I" and "Myself" because I made up (some) of the above, while some of the above ARE true of me, but at the same time, I think all of us could substitute ourselves for some or all of the above anyway.
The real point?
The fact - or the point - is, that discipline is a way of living ... and if we can't discipline ourselves to do what is right when no one is looking, how can we expect to apply unpractised discipline to our very privately performed trades?
If we can achieve a disciplined lifestyle, then we can achieve disciplined trading more easily.
If you/I live an undisciplined life, then trading will find us out.
Thanks for bringing your thoughts, and that article/quote to my attention. I am really enjoying the exchanges between yourself and Lucca, and others, and I hope the quality of this thread continues. The honesty that I am seeing here is refreshing, and the beginning of moving forward to the prize.
