I'm intrigued... new thread would be better though. Don't wanna derail.
This really for me belongs in the psychology / mindset / whatever end of things, in other words it's about your ability to apply your approach in practice, when you're unsure and under pressure and wondering whether you should be doing this and all that.
I said that I thought you were incorrect. I shouldn't have said that, because it depends on the individual. Perhaps I should have said that in general it is unlikely to be beneficial to view it as semantics, that in general it is not helpful to think "price is going to go up when you get long".
There are few aspects to this as I see it. The first is this:
There are three possibilities when you enter a trade. Price will go for you, against you, or do nothing. Two of these outcomes will cost you money because of commissions and or spread. Now, over time you may have an 'edge' (awful term) but in any individual trade it is nonsense to assume that the chance of that particular trade going your way is 60% or 65% or whatever your long-term hit rate is. Price can do anything at any time and nothing has predictive power.
So you have 3 possible outcomes, two of which will cost you money. It is therefore reasonable to assume when you enter a trade that it will lose (loose). But it is worse than that. Say you trade YM and a trip costs you $5. To make 10 ticks profit the market has to go 10 ticks plus a tick for the commission and a tick for spread. To lose 10 ticks' worth - well, you know this already.
The moment I enter a trade I am down spread and commission. So every time I put on a trade I accept I'm opening a drawdown as things stand.
Anyway, leave that aside for the moment. Say I have a good method with a phenomenal (although crap to most vendorscum) strike rate of 75%. On average 3 out of 4 trades hit, assuming I execute my method properly.
Of course, this doesn't mean over any given period I'm going to get 3 hits for each miss. Runs of 5,6 7 and more losses can easily happen. This doesn't matter because over time my 'edge' (ugh!) will play out.
AS LONG AS I EXECUTE PROPERLY - this is crucial. Because if I allow myself to expect any given trade to go my way (because the 'set up' is so good, or some other utter boll0cks like that) I start to doubt myself and my method. I think "That was a great set up, it should have gone my way" and get upset that it didn't. I take another, and another and they lose (loose). The next one comes along and I can't face another loss (loos) and of course that's the one that wipes the other three and gives me a couple of risk profit into the bargain. But I'm sitting on the sidelines with nothing but my c0ck in my hand.
Trading ultimately is about probabilities. That's one of the many reasons that I used to laugh at old Swanny and call him Walter, because he used to go on about being a "consistently profitable trader". If you want consistent, go work for the council - they'll pay you each month, no matter how bad you f uck up. A trader - even one hitting something phenomenal like 75% - is going to have losing (loosing) months EVEN WHEN HE DOES EVERYTHING RIGHT.
You just need to be able to accept this calmly and carry on going. Because otherwise the death spiral starts - you get angry, you get upset, you take revenge and 'get my money back' trades, and before you know it your account is as knackered as a brass's fandango.
Now, practical once again. This is all easy to say, but in the heat of things it's very different. You have to know it in the core of your being, in your gut, in your motherf ucking balls, otherwise it will desert you when you need it. I train myself to have this attitude by assuming that every trade will be a loser (looser) beacuse I can guarantee that that will happen (at least temporarily) because at the very least I'm down spread and commission from the off. So until something happens and something changes, that is the situation with every trade.
There's a ton of other stuff related to this, for example (probability game again) you just can't place any emphasis on any single trade because it's meaningless. Again, this attitude of mine means that I don't, either now when I'm not trading or after the third or fourth loss in a row off great set ups.
Or if you expect the market to go up when you go long, you might be less ready to bail when it goes down. Because you're long, you have an edge, and it 'should' go up. So you hang on instead of bailing.
I could go on about this all day and can give a lot more examples and scenarios if you want, but hopefully you get where I'm coming from. For me, it basically boils down to having the most appropriate attitude and mental state, and taking this approach helps me achieve and maintain that mental state.
