Some generic flaws are:
1) Trading without a TP
2) Changing TF of trades
3) Taking a trade in vengeance
4) Not putting SL
5) Changing SL adversely
6) Adding to losing positions
7) Exiting from profits early
.... etc ...etc...the list is endless....
So, is there a way out to profit from such flaws....I always thought...Why change...why change...Can I make use of my core incompetency to trade profitably. Yes....is the answer...just by changing a little....very very very little and this is possible...
Why is Problem Identification necessary....
There is no activity in the world do in past, present and would be done in future which will be done right the first time. If you look around everywhere, and when you see successful people, brands, companies, relations, products, cultures or anything, they have constantly refined to this level. No one start it right, though the intentions may always be right. For us to be right, depends on, Internal - our ability to define rightness, capability to stick what we think it right and External - environments willingness to support that it is right.
Ok...cutting this short...
Without the ability (and willingness) to Identify the problem, there is all the likelihood that for a trader, even if he has a good strike rate and a good trading system, he may at best be running on tread mill - running on the same place, thinking that he is going distances. If the problems are not identified, then it is difficult to find a remedy or solutions to address them. I may not write more here, but what I can suggest is instead of reading books on trading it would be worthwhile reading some books on basic engineering / manufacturing books on problem idenfication. No need to buy such books but glancing a few chapters or the foreword would kick start thinking activity in you mind. So visit Crossword and pick up any book relating to this subject and refer it for free
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Willingness to identify problem, is the first step. I can only but assure you that you may not really need any external help (if have just a basic IQ and reasonable intelligence) that you 'YOURSELF' will be able come out with solutions to your problems, once you identify them.
In the intial post of this thread in the 'Topic list' I had mentioned a top called, 'Show me the data', this plainy refers that YOUR histroric data of the trades taken will show what it the problem (also it will show the strengths...we will talk about it later).
Your own data (which is your history) is the most important source of information, it is your DNA. Starting from this point can help change the DNA for betterment in future. If someone asked me how can I help him trade better. I will first look at his data, his histroy. The doctors, lawyers, ask about past information before giving their opinion. The consultants, corporates hire, spend most of their time in data collection.
...I would have loved showing, problem identification and data collection techniques so you all could relate to it much better. I will see how I can do it here on this faceless forum, with my limited ability on tech skills, with variety of trader readers. ...The next step logical step post this is 'data analysing', well Excel, pivot and other functions can do it for, but you need to be handons on these, certanily not possible for me to demostrate those things here...
2) Professional traders - Traders, who have derived some techniques, methods have a TP, MM, RM plans. They mostly stick to the set rules, but since they are 'Professional traders', they again have to be in the market most of the times. Hence for different types of market conditions they will have different trading methods, instruments, which they will keep on changing or altering to be in sync with the market dynamics. They primarily focus on their 'CORE COMPETENCY' and occasionally try out different TP depending on the market conditions. They are mostly full time traders. And for such full time traders, since it is their livelihood, they cut down on volumes during downturns (may also lose opprotunities then) and increase the volume during a good performence (may also take higher risk and trade where there actually may not have been good opportunity)
3) Profitable traders - They are not in the market most of the times. They mostly sit out. They laze around like a crocodile sunbathing on the banks, oblivious of any activity happening around them. They wait for things to come to them and pounce upon them and they are out again. They can endlessly wait for a desired opportunity. They will not go deep water or into the sea to catch fish, but wait patiently by hanging a fishing line from the banks for the entire day and wait for fish to come and get hooked. They neither are careful of their core incompetencies or use their core competencies. They thrive on 'CHOR COMPETENCY'. Just like a 'Chor' (thief) they do not go every night to steal, but are constantly tracking and noticing the movement of their 'target' make up the entire plan, Plan A (pros)and Plan B (cons) and wait for the right time to strike.
It is not that who is right among the above, or who is the best, but the skills of an individual trader can be eithir of the above three competencies or blend of those. It is necessary to define what we are focusing.
.............................................Above are some of the very common flaws of failed trader. Sometimes there is an effort to correct these, and sometimes not. Given the human nature it is difficult to change as you grow up and the older you get, more difficult for one to change. The upbringing, culture and our thinking from our childhood makes things difficult for us to change. And even if there is a change, it will be marginal w.r.t to the effort put in. So, is there a way out to profit from such flaws....I always thought...Why change...why change...Can I make use of my core incompetency to trade profitably. Yes....is the answer...just by changing a little....very very very little and this is possible...(will give examples in the next post)
Coming to the Core Competency part, each of us traders here (failed or consistently successful) have some or other core competency, viz...
1) A good trading system (discretinary or mechanical)
2) A good intutive / gut feel
3) Ability to be paitent (to enter late and to exit later when in profits)
4) A good ability to allocate money, RM, MM and TP
5) Ability to stand out from the market when we do not understand what is happening.
6) Having control over self only to enter trades where there could be a handsome profit and not just a small proft.
etc...etc...
There could be a few more core competency areas. And all can lead profitable trades.
The point here is not how many are our core incompetency or core competent areas. But the idea is to IDENTIFY them. The first step begins with identifying...once you identify them, then can you find a solution...as I said the solution is within you...Even if there in just one Core competency, you can sharpen it so much that you can milk the market with that one thing itself for eternity. And similarly if you identify and focus on core incompetencies, howsoever many they are you can still use it in your favour by just a small tweaking....
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