Sticking to your plan makes money

[socrates]

This is an extract the Innerworth newsletter.

Following Your Plan

Many novice traders have trouble following their trading plans. Either they don't specify them clearly enough or they make a plan but feel it isn't always important to follow it. But the consistently profitable trader maintains discipline that means making a plan trading it.


It is important to distinguish justified wins unjustified wins. A justified win is when a trader makes a very detailed trading plan follows the plan. A win that results following a trading plan is justified reins discipline. An unjustified win occurs when a trader doesn't make a plan or drifts the plan. He or she may be rewarded but the outcome occurred by chance. The win is unjustified can rein undisciplined trading.
Cultivating discipline is vital for consistent profitable trading. Trading is requires that one capitalize on good odds. One implements proven trading strategies over over so that across a series of trades the strategies work enough to produce an overall profit; it's like allowing the law of averages to work in your favor by making trade after trade. It is similar to a basketball player who makes shot after shot on the basketball court so as to accumulate a winning number of points. The more shots you take the more likely you will amass points. But the winning player is the person who first develops the skill to make the shot consistently so that at every possible opportunity the ball is likely to go through the basket. To a great extent consistency is key. If the player uses one approach one time a different approach at another time performance is haphazard. It's the same for trading. One must trade consistently following a specific trading plan on each every single trade so that across the series of trades you will make an overall profit. If you follow the plan sometimes abon it at other times you throw off the probabilities. Suppose you used a strategy that had a track record of 80%. Under the best-case scenario you could only expect to win 80% of the time. But since history doesn't always repeat itself it's likely that you will win less than 80% of the time. If you don't execute the trading strategy the same way each time you will decrease your winning odds. fewer winning trades may mean an overall loss. That's why discipline is so important.

With discipline comes profitability. Don't let unjustified wins interfere with your ability to maintain discipline. Follow your trading plan rein the idea that if you follow your plan you will end up with profits in the long run. If you abon your trading plan get an unjustified win you may feel good in the short term but you'll pay a long term price when it comes to your ability to maintain discipline. So clearly define your trades stick with your trading plan. The justified wins you receive following your plan with help you develop an unwavering pattern of disciplined trading.



I hope this helps some of you
Stu

[dstock]

Well said.

[FxSigma]

I know this is old but i thought i would reactivate this thread so Everyone can read it again! never hurts to read it a few times so you dont stray!

Cheers

[gregh285]

that is one of the most important realistic comments ever to have been posted.

Never a truer word said.

Form is temporary Class is permanent.