Thanks for the reply Cody, I agree, The gut feeling has made me a lot of money, but as you say practice practice practice can make close to perfection,, I will be following you from now on. Thanks for the recent video, I have once again found my mojo!

I think the key is finding a nice balance where you follow your rules nearly all the time with very well-defined risk but also allow yourself the flexibility to take the occasional “gut feel” trade when the moment arises. Once you start trading too often outside the plan then all the sudden your edge disappears, confidence erodes, and it takes a bit of a mental refresh to get back on track.

I’ve always liked the thoughts of Ed Seykota on this where two of his trading rules were 4) Follow the rules without question and 5) Know when to break the rules. It sounds a bit counter-intuitive but as long as you’re selective and disciplined enough to stick with your plan the vast majority of the time I think having a bit of freedom releases some of the creative pressure that builds up and can increase profitability as well (at least in small doses). Maybe I need to do an article on that little wrinkle… Haha. Thanks for the comment, Garret!

Thanks, Dave! This feedback is great and makes the time put into writing these articles more than worthwhile. I’ve got a some more topics that I think are commonly neglected so expect more soon…

Hi Howard. Discipline is so important as a trader, as you no doubt know. When we try to rush results and take trades that don’t fit our plan it inevitably hurts results but if you can be patient and work within your plan then profit tends to come quite easily. That said, you’re not alone in finding that trading a live account changes your mental approach a bit and causes you to be less profitable than in Sim. That’s why it’s so important to test things out thoroughly first and truly develop confidence in your edge because that way you’ll know on a very deep level that trying over-manage things is likely to only hurt results.

You might find it useful to keep some stats. If you know that a large percentage of the time a trade will hit your 2+ point target and you start adding up how many points you are missing out on by taking those profits early then it will be easier to change behaviour. Sometimes we think that adding extra discretion to the process will only improve things but often the actual stats don’t back that up, so if that’s the case then take a more mechanical approach and only limit your discretionary profit-taking to rare but well-defined cases.

Hey Anthony. It’s not at all unusual to get in a panic after a couple of losses and then compound the problem but this is a behaviour that can be changed through practice and experience. If you’ve truly tested your edge then you know that the outcome of a single trade doesn’t really matter. Think in terms of samples of 20 trades or more. If you have a positive expectancy then you will see profit so don’t worry about whether one trade is a win or a loss and focus on whether you followed your plan. If you take good trades that fit your plan consistently then your edge will have a chance to play out and the profits will come naturally.