Is perfection execution perfection? Or is it something else?
When we are first exposed to trading, there are certain things that we find out about trading, and we discover even more about ourselves.
1 – The trade setup:
As a new trader and investor, we pay much time, effort, and attention into determining where and how to get into a trade. These are indeed important subjects. We are told they are key to trading, and they are, but they are not the only keys.
We want to be comfortable putting money at risk, and we have a desire to make money. For the early trader, it is often a rule or idea provided by others, and we convince ourselves that it is the right answer through the proof right in front of us. We naturally look for something to lean on.
We are shown the setup and stop and targets by another person or source, and they typically work. It is right there on the screen, and you feel you can execute it. In fact, it may seem too easy.
We build confidence in the system and feel that our confidence is well justified as there are little doubts the setup will work, and we just need to execute the steps perfectly.
2 – The Trade, Testing, and Execution:
Once we have the trade setup, we enter the trade. The first trade works! We now feel we have the answer. A trade allowed entry and hit the target. Man, this is going to be sweet! We will make lots of money and there is no looking back!
We will find and set up our trades exactly like we were taught. We follow rules and see things exactly like our mentors did, and we just execute. It will be perfect.
We go about trading using the things we were instructed to do, and everything appears to be just fine. Returns are good, so we continue to execute exactly as we had been taught to.
Eventually, the reality of the market’s unpredictability or some other unexpected market condition challenges us (and our trade plan). Several trades are stopped out in a row. Our winning percentage falters. We continue to put on trades, but we just aren’t getting the results we expect. What did they leave out and not tell us about?
1 – The Impasse:
We think: What is wrong? Is it me? Is there something I wasn’t told about trading? Are the markets just picking on ME? I have been setting up trades exactly like I was shown…EXACTLY! I have been the perfect trader! I have been following the rules perfectly!
We may even increase our trade size to “get the money back. We may increase our risk to get the money back, or change securities. Nothing seems to be working. So, we pause our trading, or stop entirely.
It isn’t going well. “The trade system just doesn’t work”, we say. “It was flawed from the start, and I just didn’t see it”, we say.
Now discouraged, we go back to the old speculative and non-repeatable ways to trade that had us reaching for help in the first place. We are lost again, discouraged, and acting with fear.
We fight to get our money back. We increase our trade size to “get the money back. We increase our risk to get the money back. We focus on differing securities. Nothing seems to be working.
1 – The Resolution:
What we have been experiencing is a very normal sequence of events that every trader has gone through. If there was a perfect individual trading strategy, don’t you think it would be automated and sold for billions of dollars? There isn’t one.
When we have a new trade system or technique, it is very important that we make it our own. We are responsible for it. It provides a framework for our trading, but we must still understand it is a start into an entire trading strategy for the individual. This takes time and work.
We should test every new idea. We should allow adjustments to make it our own. Then, and only then, are we able to maturely deal with its failures and successes.
It isn’t easy. There are lots of moving parts. (We all have lots of moving parts). But, when we reach a point where our plans are truly part of how we think and behave, we will be more able to cope with the challenges of the market in a way that puts US up front and center. From that standpoint, we are more able to get back on the path to success.
Being in control of your trading strategies (and your success), is the “PERFECTION” you were looking for…
