I’ve just come across this post in the archives of a blog I occasionally follow. It says exactly what I have also learned – be content if you can capture even a small fraction of market moves, consistently. The key here is consistency. As long as I am making profits every month, and preferably every week, even if that profit is only 20% of the range of that week, that is a superior achievement.
In the example of the last trade I closed, this principle was an important factor. When EJ broke decisively above 117.30 I was pretty sure that we’ve seen the low for this move. At that time I had the chance to close all my trades for about 100 pips more. I did not do that because my system rules told me to wait. Why don’t I bend the rules, just this once? (Actually I do, and invariably lose money in that case. But for the sake of this example let’s say that I don’t). The reason is that I have worked out every angle of trading into my rules and I’VE TESTED THIS SYSTEM RIGOROUSLY for over 8 months now. The results of this rigorous test have been extremely good, which gives me great confidence and peace of mind now when I apply those rules. If I break rules one, it unsettles my mind, as then I have to use untested rules for stops, trade size, etc. And when the market moves against my trade, as it always does, I stress and make mistakes. As I’m learning when I compare my live account with the system results, it’s better to give up a little in a trade every now and then as long as I am profitable over the longer term.
I’ve read many books on trading in the past 20 years, and countless web pages in the past 10 years. Many books contain this kind of advice. I thought I understood it at the time, but now in hindsight I realize that I only understood it intellectually, not the way experience drives home the same lessons.
Patience and discipline – the key to trading success.