Read any material designed to educate you on how to build a disciplined plan for your trading day and there will almost always be some mention of remaining flexible. For many of us, this can seem confusing since we are working diligently on creating a trading plan that works and have ultimately decided to stick to it so that our emotional responses, a "bad day," and self doubt do not get to creep into the picture and cause us mental trading paralysis.
Yet without the element of flexibility, we end up missing out on opportunities or making poor decisions that we are aware are poor but we're busy being disciplined so we go through with it anyway. As silly as that might seem, it is really quite true for almost every novice trader who is developing plans and sticking with them in order to gain self confidence and control emotional reaction.
So here's the kicker, we need discipline. We need the discipline to show up every day and the discipline to show up with the best attitude we can. We need the discipline to follow our trading plan no matter what our emotional distress is indicating. And to make things just a tad more complex in our life, we also need the flexibility to know when to chuck it all out the window and decide something brand new on the fly.
There are absolutely no guarantees in trading and no matter how well researched a trading plan, or how well thought out a trading plan might be, there are times when one of two events might occur. The first event is a sudden and unexpected change in the market that might call for a fast and radical change of plans. The second, and much more likely to happen is a sudden change in your interpretation of information.
Just like when we have an "Ah-ha" moment. These are those moments that we realize something we believed to be absolutely true is suddenly presented in a new light, and we realize that we now believe something totally different. Usually this occurs because we make a connection that we hadn't made previously. These "Ah-ha" moments happen in life and they happen in trading.
When we interpret information differently sometimes we end up in a state of influx without being totally sure which of those beliefs is the actual truth outside of our own heads. In other moments, we take on the new belief with such abandon that we don't stop for even the briefest of pauses to consider whether we are now right wrong. A new belief held with even the greatest of conviction may or may not be closer to the truth, but what really counts is how we feel about it.
So how are we supposed to know when to maintain our discipline and when to engage our flexibility? There is no pat answer and systematic answers almost never work in their entirety. This is in fact yet another skill that will develop more fully over time. The best advice I have ever heard regarding this topic was rather simple. In the early years of trading while you are still learning how to develop strong trading plans and while the intuition you will develop over time will develop as well, the "Ah-ha" moments that leave you with no question and transform your belief are those that deserve to be listened to.
If self doubt is creeping in after you experience these moments, keep a record of it and look back to help you determine whether those moments of self doubt were worthy of listening to the in way that you chose. Should you decide to chuck a trading plan and adopt a totally new attitude on any given trade, it is best to indicate as much information as possible for later interpretation.
Trading plan development is a continuing development of skills. As your skills develop to a higher level, so will your ability to create better trading plans. That means during your rapid growth period that your trading plans may need to change rapidly while start applying new information. Eventually, you will have a much clearer picture regarding what you should listen to and what you should lay aside for the time being.
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100
Date Published :
Dec 27 2008