BarrosMetrics Views: The Trading Plan
Trading success depends on the three factors mentioned in the previous blogs:
Winning Psychology x Effective Risk Managment x Written Plan (with an edge)
While I consider a written plan the least important of the three, it nevertheless is a requisite for success.I place a ‘multiplication’ sign between the elements to highlight that you need all three.
The plan comes into its own when a trader attains a measure of self-awareness necessary to consistently execute his risk management and trading rules. In this blog, I’ll examine and consider the differences between a simple and complex but deeper approach.
Ultimately the efficacy of a plan depends on two interleaving factors:
- How well the plan suits a trader’s personality and
- How well the plan reflects reality so that it delivers a high incidence of profitable trades over a large sample size.
In effect, the plan’s efficacy is dependent on how well a trader sees “the outcome there as correctly seen by his internal interpretations’.
As a visual trader, I rely on pattern recognition to provide the high probability trades. My path to self-knowledge was strewn with difficulties; and if I had to do it all over again, the one aspect I want to change would be the outcome I’d seek at the beginning.
I started with the idea that to succeed, I had to understand the ‘Nature of Markets’. This meant I started seeking to trade with a highly subjective component. And the problem with that is as humans we have a capacity for self-deception.
(to be concluded tomorrow July 8)