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Chatroom reflections on analyzing new ideas

In the chatroom, we were discussing what to do if your target symbol in the 551w system (a system we like) gapped above your mechanical entry (a price we define as an entry in the non-discretionary ruleset), which led to this stream of consciousness dialogue:


As an exercise, take a sheet of paper and title it: Event-> 551w candidates have all gapped above their mechanical entry and the market is going up, after being in oversold conditions.


Then divide the paper into 3 sections: top, middle bottom, and title the sections: why i want to be long; why i want to be short, why i want to stand aside


In each section make 4 columns, entitled: Reasons, Rewards, Risks, Reflections


in Reasons, list beliefs, emotions, assumptions

in Rewards: describe the potential gains you see

in Risks, describe what can go wrong and how you would know

in Reflections: after reviewing the first 3 columns, sort out how you could trade it


Do that for the first 2 sections (long & short); in the 3d section, address why its too uncertain to act directionally


Then consider all 3 sections and formulate a strategy that reflects your thinking and feeling


You will then have a strategy that is connected to your goals, objectives, risk tolerance.


I believe you might be chasing techniques without connecting them to your “center”.

I have this tendency all the time, so i recognize the symptoms.

The only way i have found out of the wilderness that I can really commit to, is to do what I have just described above.

Your notes become the basis for a trading system definition, or part of it.


You might also reflect on this question,


“How would an observer know I am committed to this trading strategy? What would they see?”


And then, what would it take for me to be committed to this trading plan? If I am not committed to the plan: is the shortfall due to knowledge or feelings?…


And that should lead us to: how much of my capital should I commit to this trading system/plan?


And our capital is not just money, but is also time, focus, energy


An interesting decision is: does commitment to a trading plan include putting my identity and self-image into it? Is that part of my trading capital?


Or can you let the system be the system without tying your self-image, self-concept, feelings of worth, into the results

Can you let the system just be the system, on its own, with its results being the relationship between the ruleset and the market?


Can you let your Self simply be the one to decide how much capital to apply to a ruleset that allows you to remain detached, professional, managerial?


What’s the worst thing that can happen if you decide not to trade the 551ws <a particular signal we like> that have gapped above the mechanical entry <a defined price for entry>?

the answer had better be: no loss on the first question


What’s the worst normal thing that can happen if you go long? if you go short?

the answer had better be: “-1R”


Opportunity cost is what you pay for not trading.

If we believe the market will offer infinite opportunity, then letting a trade go is meaningless.


Can u learn to live without regret of letting a good trade go to someone else?


Regret isn’t fair to you.

Regret is evaluating the past decision with the benefit of the specific results in hand.

That’s not fair to the person who made the decision.


If the decision at the time was uninformed by the facts available, then we can evaluate the decision in the context of the moment…


But going back in time with new facts is unfair and judgmental.


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