Info!! Best Practices Inwards Trading: Using Rules To Hit Consistency Of Performance

Think of the successes of slap-up sports teams or businesses.  In too hence many cases, consistency inwards execution is a mutual feature.  The slap-up football game squad doesn't simply block too tackle well; they produce too hence every play, every game.  Influenza A virus subtype H5N1 trouble organisation similar FedEx or UPS doesn't simply deliver on time; they hitting their fourth dimension targets consistently.  How tin traders accomplish high levels of consistency?
The response is past times turning trading practices into trading rules.  Rules are what plough best practices into habits--and habits are what laissez passer on us consistency.  Contrary to pop conception, land of report is non close forcing yourself to produce the correct thing.  It's close turning correct things into habit patterns.

Today's best do comes to us from reader Markham Gross (@MarkhamGross), who is the founder of Anderson Creek Trading, LLC.  He explains how the purpose of rules too systems convey consistency to trading:

"A trader or investor cannot command markets or the exterior world.  All that is nether the trader's command is his or her reactions to what is happening inwards markets or what is perceived to last happening inwards markets.  Therefore, systems should last applied.  The best systems are frequently simple.  Spreadsheets tin run every bit an implementation tool too approximately calorie-free programming skills volition also choke a long way.  Systems should last comprised of specific rules for when to enter, leave of absence for loss, leave of absence for profits, too size of the positions.  These rules tin tally the trader's personality too temperament.  They should last testable.  Although at that spot are limits to backtesting, performing approximately backtests volition assist the trader know what to human face too hence they are non surprised past times normal drawdowns.  To approach the marketplace without rules on a daily or weekly solid seat down would last a mistake."

What I notice inwards my run amongst traders is that many of the best run inwards a hybrid fashion:  they brand decisions on a discretionary solid seat down *and* their decisions are guided past times explicit too tested rules.  For example, i trader I worked amongst years agone examined cost breakouts that tended to proceed inwards the administration of the breakout versus those that reversed dorsum into the prior range.  He establish several factors differentiated breakouts from fakeouts, including the book of the move, where the movement stood amongst honor to longer fourth dimension frame activity, too the fourth dimension of solar daytime of the breakout.  He turned these factors into a checklist, too hence that he solely took breakout trades that scored highly on his criteria.  Those rules non solely helped him notice winning trades, but kept him out of many losers.  

When that trader starting fourth dimension generated the rules, he used the checklist everyday to guide his actions.  Eventually, the criteria became enterprise trading habits too he implemented them routinely.  Repetition is the woman raise of habits too habits are the backbone of discipline.  Turning your successful strategies into rules is a slap-up means to ensure that your best practices larn robust processes.

Further Reading:  Success every bit a Habit
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