Learning to discretionary trade profitably

[robster970]

After 8 months of reading, screen time, trying mechanical stuff out, demo trading, trading a small account badly, experimentation, oscillation between different timeframes and style, I had my epiphany and it came together.

I can now see why no single source of information can teach you to trade profitably. I can also see why indicators are supportive but not really where it's at. I can see why system trading is profitable but does not give you the edge or the adaptibility that discretionary gives you. Even if I'd have known all this stuff 8 months ago, I would not have understood what it meant without going through it.

There's still a long way to go for me but this site has been a gem and a minefield simultaneously. Good on you to all those that contribute meaningfully and meaninglessly to this forum. I would not have got here without your help/humour/trolling/backstabbing/backslapping.

 

[normbeef]

So do you trade this way now ? how have you faired opposed to "system" trading ?

 

[robster970]

So do you trade this way now ? how have you faired opposed to "system" trading ?

This has only been over the last 2 weeks really that I've seen a significant turn in the discretionary trading. As I'm taking about 3-5 trades per day over 2 weeks, I've got to about 50 trades so know it is outperforming my mechanical based trading. What is marked for me is the ability to look at daily, 1H, 5m and 1m charts and decide whether there is a high probability set-up going on and whether to play a reversal, breakout or ride a trend by entering when it pulls back. It's really sharpened up my entries so I know quickly whether a trade is going south and whether to scratch it instead of hanging around for a long period of time (relative to the time frame your trading) gradually leaking a lose situation until it finally confirms your suspicions. I think what's happened to me is a bit 'holistic' and lot's of information that has been read,understood and experienced is now being applied with reference to lots of other things I've read understood and experienced. It's like I said, it's kind of come together.

I've had a systematic based trading method working for a number of months now based upon swing trading. It's fine and lovely whilst trending and pretty dismal when markets are range bound. It is a faithful and a trusted method for me and I have no qualms about using it.

I think I was frustrated about the fact that the system is quite one dimensional which led me down what I consider to be one of the most difficult, frustrating but ultimately rewarding experiences I've gone through with the exception of having family/children and running a business.

 

[PokerBrat]

with the exception of having family/children and running a business.

Well, I am doing ok at those two, but I can't crack this trading game for love nor money.

Good on you for reaching this point. Just don't let your guard down, as complacency is the killer of success.

 

[HaloTrader]

I think indicators are fine in terms of a setup for your entry, as long as the indicator isn't the reason for the entry, but rather a confirmation and an official discplined way of entering the market. In other words, price hits your trendline, indicator forms, target is resistance - Setup forms, enter trade... et cetc

 

[robster970]

I think indicators are fine in terms of a setup for your entry, as long as the indicator isn't the reason for the entry, but rather a confirmation and an official discplined way of entering the market. In other words, price hits your trendline, indicator forms, target is resistance - Setup forms, enter trade... et cetc

Down to 2 trendlines just for confirmation as you say but they aren't much use to me for reversal and breakouts. ATR too. Nothing else, just the candles to determine entry and exits. I've also found just watching the price in 5m timeframe for days on end to get a feel for what the market is doing and how the S&R is forming.

 

[normbeef]

This has only been over the last 2 weeks really that I've seen a significant turn in the discretionary trading. As I'm taking about 3-5 trades per day over 2 weeks, I've got to about 50 trades so know it is outperforming my mechanical based trading. What is marked for me is the ability to look at daily, 1H, 5m and 1m charts and decide whether there is a high probability set-up going on and whether to play a reversal, breakout or ride a trend by entering when it pulls back. It's really sharpened up my entries so I know quickly whether a trade is going south and whether to scratch it instead of hanging around for a long period of time (relative to the time frame your trading) gradually leaking a lose situation until it finally confirms your suspicions. I think what's happened to me is a bit 'holistic' and lot's of information that has been read,understood and experienced is now being applied with reference to lots of other things I've read understood and experienced. It's like I said, it's kind of come together.

I've had a systematic based trading method working for a number of months now based upon swing trading. It's fine and lovely whilst trending and pretty dismal when markets are range bound. It is a faithful and a trusted method for me and I have no qualms about using it.

I think I was frustrated about the fact that the system is quite one dimensional which led me down what I consider to be one of the most difficult, frustrating but ultimately rewarding experiences I've gone through with the exception of having family/children and running a business.

So from your reply it appears you are killing your losers faster ? which is nearly always a good thing..

How do you feel about keeping this up consistently, personally I think the discretionary Folks have a harder time during a drawdown because they cannot objectivley look at a "system" and decide what might be wrong... in this scenario you are the "system" !!

 

[robster970]

So from your reply it appears you are killing your losers faster ? which is nearly always a good thing..

How do you feel about keeping this up consistently, personally I think the discretionary Folks have a harder time during a drawdown because they cannot objectivley look at a "system" and decide what might be wrong... in this scenario you are the "system" !!

If I try to summarise what's changed, it's probably:

1. Being really anal about entries to maximise profit and minimise potential losses - this is probably the single biggest factor in trade execution, regardless of timeframe. The consequence of this is small losses well within maximum risk per trade, contextual to the timeframe and the instrument.

2. Being a lot more discerning about set-ups and their profit potential. Also being able to move up and down the timeframe (i.e. there might not be an entry at 1H because it's in a range but that range might span 3 pts on E-Mini and a good entry would yield a $200+ return with a high probablility). This also implies flexibility in set-up possibilities.

3. Attitude to money management and capital preservation. I understand what drives undercapitalisation for certain timeframes on certain instruments and therefore can choose to avoid them.

4. Understanding the personality of the market/instrument you're trading.

How I deal with eventual drawdowns and my basic psychology is probably the next big hurdle, especially as the account size increases. I've got a maths background so even though I can rationalise what's going on within a statistically significant sample, dealing with my subconcious and the damage that could do is next. We'll see how we get on. I hear that people blow their accounts after about 18mnths through complacency at an alarming rate.

 

[robster970]

Well, I am doing ok at those two, but I can't crack this trading game for love nor money.

Good on you for reaching this point. Just don't let your guard down, as complacency is the killer of success.

Hang in there. It does eventually come together but it's a combination of screen time, doing a lot of badly executed trades and reading a right lot. Finding what suits you is half the battle and building some parameters to compensate for your personality have helped me (i.e. if I get 2 losers on the trot, I knock it on the head for the day otherwise I know I'll just chase the market around and generally be on the wrong side of the trade).

 

[Charlton]

If I try to summarise what's changed, it's probably:

1. Being really anal about entries to maximise profit and minimise potential losses - this is probably the single biggest factor in trade execution, regardless of timeframe. The consequence of this is small losses well within maximum risk per trade, contextual to the timeframe and the instrument.

2. Being a lot more discerning about set-ups and their profit potential. Also being able to move up and down the timeframe (i.e. there might not be an entry at 1H because it's in a range but that range might span 3 pts on E-Mini and a good entry would yield a $200+ return with a high probablility). This also implies flexibility in set-up possibilities.

3. Attitude to money management and capital preservation. I understand what drives undercapitalisation for certain timeframes on certain instruments and therefore can choose to avoid them.

4. Understanding the personality of the market/instrument you're trading.

How I deal with eventual drawdowns and my basic psychology is probably the next big hurdle, especially as the account size increases. I've got a maths background so even though I can rationalise what's going on within a statistically significant sample, dealing with my subconcious and the damage that could do is next. We'll see how we get on. I hear that people blow their accounts after about 18mnths through complacency at an alarming rate.

Becoming a consistent trader requires a lot of hard work and is not the easy option that most newbies at first think.

The journey provides a personal insight that is much more than just learning the technical aspects of trading.

You probably feel that you have now "come home".

Congratulations :clap:

Charlton

 

[robster970]

Becoming a consistent trader requires a lot of hard work and is not the easy option that most newbies at first think.

The journey provides a personal insight that is much more than just learning the technical aspects of trading.

You probably feel that you have now "come home".

Congratulations :clap:

Charlton

You're right on the nose with how I feel. Thanks man. It does feel a bit like I've been in the wilderness for quite some time. I texted my mrs today telling her I'd learnt to trade which confused her a bit seeing as she's watched me doing something akin to trading for 8 months. I just sat her down and pulled $100 on E-mini S&P after spotting a breakout. It's kind of weird.

I feel like I've passed my driving test. I can control the car and make it go anywhere I like. Now starts the lengthy journey of learning to drive.

 

[Black Swan]

Becoming a consistent trader requires a lot of hard work and is not the easy option that most newbies at first think.

The journey provides a personal insight that is much more than just learning the technical aspects of trading.

You probably feel that you have now "come home".

Congratulations :clap:

Charlton

Good post, good points, I particularly liked the bit I've highlighted, I use the term "trading has been waiting for me"...

 

[Black Swan]

If I try to summarise what's changed, it's probably:

1. Being really anal about entries to maximise profit and minimise potential losses - this is probably the single biggest factor in trade execution, regardless of timeframe. The consequence of this is small losses well within maximum risk per trade, contextual to the timeframe and the instrument.

2. Being a lot more discerning about set-ups and their profit potential. Also being able to move up and down the timeframe (i.e. there might not be an entry at 1H because it's in a range but that range might span 3 pts on E-Mini and a good entry would yield a $200+ return with a high probablility). This also implies flexibility in set-up possibilities.

3. Attitude to money management and capital preservation. I understand what drives undercapitalisation for certain timeframes on certain instruments and therefore can choose to avoid them.

4. Understanding the personality of the market/instrument you're trading.

How I deal with eventual drawdowns and my basic psychology is probably the next big hurdle, especially as the account size increases. I've got a maths background so even though I can rationalise what's going on within a statistically significant sample, dealing with my subconcious and the damage that could do is next. We'll see how we get on. I hear that people blow their accounts after about 18mnths through complacency at an alarming rate.

Is this "discretionary" or simply getting better at what you were/are doing?

 

[robster970]

Is this "discretionary" or simply getting better at what you were/are doing?

It doesn't feel mechanical any longer to me. Whether it is discretionary I suppose refers to your own frame of reference. I suppose people who've been "discretionary" trading for years probably think this is just mechanical to them.

I think I've defined discretionary as being able to exercise a number of choices covering timeframe, style, entry and exit based upon circumstances and conditions rather than mechanically executing without question on any single timeframe, instrument or method.

Who knows - interesting point though - refinement or free choice........

 

[tenbobtrader]

well done

for your ref later if required

"I hear that people blow their accounts after about 18mnths through complacency at an alarming rate.

This has only been over the last 2 weeks really that I've seen a significant turn in the discretionary trading. As I'm taking about 3-5 trades per day over 2 weeks, I've got to about 50 trades so know it is outperforming my mechanical based trading

(i.e. if I get 2 losers on the trot, I knock it on the head for the day otherwise I know I'll just chase the market around and generally be on the wrong side of the trade"


Well done again

just take a minute to get all details down ............ EVERY DETAIL inc your own routine

1,2,3,4, ....... list include self monitor ......thoughts the lot

sure you will find criterior that is MEK method ..... repeatable / complete rule based

Beware of any changes you make from here on in


All the best with it, keep it going

Andy

 

[PokerBrat]

I feel like I've passed my driving test. I can control the car and make it go anywhere I like. Now starts the lengthy journey of learning to drive.

Nice analogy. Bear in mind that the highest death rate amongst drivers is young 18-25 yr old men who have just passed their test.

 

[HaloTrader]

Nice analogy. Bear in mind that the highest death rate amongst drivers is young 18-25 yr old men who have just passed their test.

Oh crap...

 

[robster970]

So providing I don't blow my account in the next 7 years, I'll be out of the woods then?

 

[tenbobtrader]

A little bit more

well done

for your ref later if required

"I hear that people blow their accounts after about 18mnths through complacency at an alarming rate.

Not sure thats the reason or the only reason, perhaps the constant decision making, presure to maintain results, etc etc erodes a discretional edge

This has only been over the last 2 weeks really that I've seen a significant turn in the discretionary trading. As I'm taking about 3-5 trades per day over 2 weeks, I've got to about 50 trades so know it is outperforming my mechanical based trading

(i.e. if I get 2 losers on the trot, I knock it on the head for the day otherwise I know I'll just chase the market around and generally be on the wrong side of the trade"


Well done again

just take a minute to get all details down ............ EVERY DETAIL inc your own routine

1,2,3,4, ....... list include self monitor ......thoughts the lot

sure you will find criterior that is MEK method ..... repeatable / complete rule based

Beware of any changes you make from here on in


All the best with it, keep it going

Andy

discretionary trading = a trader believes there is skill in his or her selection and that he or she increased the chance of this particular trade being a winner

Skill in basic observation ?

EVERY DETAIL of your method / observations etc must be known to you, you should still be able to explain method to another trader

discretion can lead to elevated emotional state

When your Hot your Hot

God complex

discretion is a very 2 edged sword = missing good trades can lead to elevated emotional state

When you are Cold you are Cold

write it all down, what exactly you are doing, selection criterior, conditions the lot. Without a proper reference you will find or could find it very hard to regain winning ways again

thats when the emotions and damaged caused by earlier bad habits learned really bite and damage your future potential :!:

If I had a do over ~ I would trade a very simple method and learn to apply discretion later and no for certain which bit I was being discretional about

this is directed at newbie thread readers not the thread creator who could be the best thing since sliced bread for all I know

have a good weekend

Andy

 

[robster970]

this is directed at newbie thread readers not the thread creator who could be the best thing since sliced bread for all I know Andy

One lose and one scratch today. Knocked on the head to go to kids sports day this aft. I think I'm a long way off sliced bread...............