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You know, I hear lots of people saying stuff these days (and probably it’s always been the same really) about how it’s important to “simplify your trading” and I agree whole-heartedly. However, I think it’s also important to clear some points up first. In the same way that pointing out that you need to find a strategy that fits your personality (which also is kind of silly imo) is about as useful as a chocolate teapot, to tell someone to simplify their trading is also not especially useful. Perhaps it’s a little different for automated traders but given that a good proportion of the users here will be discretionary traders, it’s important to expand upon.

There are two reasons I believe this to be true and first off is that trading and the markets are not simple. A thorough trading plan needs to account for so many different circumstances which many more experienced traders do almost automatically. With a plan and over time, you might be able to as well. What time of day are you trading, are there any big options expirations due, is the market trending or bracketing, what is the volume like, are there any central bank speeches, is there data due out, are you near to your daily stop limit (if you even have one), how much sleep did you get, are there any distractions at home, yada yada yada. Such things are indeed fairly simple however, their cumulative effect is to complicate trading.

Second off and perhaps most importantly is that a simple solution to any problem complex or otherwise (trading included) usually comes about by having a detailed and thorough understanding of the problem itself. What I’m suggesting is that to cut out all the crap from your trading and “simplify” it you must first understand what the “crap” is and off course what really matters. This takes time, effort, dedication and a little bit of common sense. It’s not easy and therefore most people are unable to do it.

So when someone says to you again “simplify your trading” realize that you must pick your plan apart and try to understand it better. Understand the market and its nuances as best you can. Study market data. Study your own trading data. Do all you can to understand yourself and your interaction with the market. Then simplify your trading.

2012-09-30 21:48:06

Source: http://www.traderslaboratory.com/forums/showthread.php?t=14381&goto=newpost