Wednesday, February 6, 2013

Sandcastles- Shifting Thoughts And Supports

1. A castle-like structure built of wet sand, as by children at a beach.
2. Something that lacks substance or significance."
Trying to out-think your own logic is stupid on so many levels. 
Firstly, you can't collect any meaningful data about your interaction with the market if you are a neurotic, strategy-changing mess. So stop doing everything and start doing something consistently! Secondly, how can we learn to trust ourselves if we can't define what we are by what we do if we don't actually do any one thing?? 
Slave to a combination of Outcome Bias and Loss Aversion, we have the urge to circumnavigate our own strategies (!!!) in an attempt to avoid inevitable losses- or at least exert some control (there's that word again!) over when they do or do not occur...all we really do is miss the real chance to learn something about our long-term relationship with the market.

If, by your analysis, a pattern/setup was "strong" or "supposed to work", shouldn't that then offer a very profitable trade in the opposite direction of the failed pattern/setup especially if there is some sign of rejection on the other side of the stop zone...??
If it doesn't, then you're likely building on sand, at least on this occasion. The crucial thing is to let the market tell you that with a "failed trade" (Not necessarily an unprofitable trade...) rather than doubting your own train of thought...a sure sign of lack of trust and/or need for control. You can't modify what doesn't exist in the first place.

Incidentally, I'm back on the live account with half-size which has made all the difference. If one is having difficulty bringing practice performance into the live arena, I'd highly recommend trying to trade a part of whatever size was used in SIM forward-testing when attempting to go live.
Feels like SIM...but with tangible benefits :).

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