I will do some research on this idea and see what’s out there but for now i want t get it down in it’s “pure” form. If anyone has any thoughts on it i would be glad to hear them.
As a new trader with little or no experience and minimal study hours the main focus seems to be on calculations showing how much money can be made, for now let’s call it “THAT Million” and how quickly it can be done. This thought process is backed up by the numerous posts in the Newbie section of this forum. Lets call that thought process the Natural State.
The Natural State comes from the world outside of trading and doesn’t take into account the Market and depending on your beliefs about the market, the random or partially random element(s) and the zero control we as retail traders have over the market.
Most people get over the “THAT Million” part of the Natural state. That leaves us with the time component.
As intermediate or experienced retail traders we are not concerned with making a million in 6 months but we are concerned with performance. Most general psychology as well as sports and business psychology books say that humans don’t work well perpetually but that performance is increased when we set Goals. So being efficeient individuals we do our homework and jump on the SMART Goal ride. SMART stands for Specific, Measurable, Achievable, Results focused and Time-bound. ([I]Forget any immediate thoughts on the results-focused part for now[/I])
Time-bound, hmmm. Lets look at a time-binding, the binding we use a lot in trading is “the month”. You know how much you made or lost last month and will compare it to other months or the same month last year etc, its a measure of performance. We also look to the end of the month or what s remaining in the month etc, etc.
With time binding comes another time related component of the Natural State and thats [B]Scheduling[/B].
In everyday life we schedule things to efficiently fit in as much possible and to make what we perceive to be the best use of our time. In most Jobs putting in hard work is synonymous with long hours.
In trading does price have a schedule?
No, it’s event driven. lets say i expect price to move 20 pips upwards. That 20 pip move is an event. How long until my set up appears? How long will the event take? 3 mins or 3 hours? We don’t know there is no schedule. The risk and the reward for the 3 mins or 3 hours is the same. So we are using a fixed time, time bounded, scheduled approach daily to a market which respects non of these things.
Now the next part assumes you trade a system with an edge.
[B]Human errror[/B]
Assuming you are a day-trader or intra-day trader, you can only make errors on a trading day that you trade. Lets say that on between 1-3 of these trading days in your time-bounded month the risk of human error is significantly higher than on the other days…[I]your own trading experience will give you rough estimation[/I].
We all have; or should have systems which aim to reduce the occurrence of human error and/or emotional trading and to minimse it’s effects when it occurs. [B]Notice however[/B] that some traders after a series of “battles” would rather change trading strategies or trading styles, time frames etc than take a day off on a day when they have an inkling that today the risk of human error might be higher than usual.
Why? I believe it has nothing to do with intelligence, competence or “heart” but because taking that day off would break our fixed schedule which we have been conditioned by “life” to follow.
Conflicts, conflicts
[B]Can we create a dynamic non linear schedule which avoids the perpetual trap allowing increased performance but also factor in days in which the potential for human error is greater?[/B]
My idea is this:
I trade Tue-Thu and look as Fri as a bonus half day (NY sess, news only). Lets say then that my trading week ([I]placing trades not the other stuff[/I]) is 3 days long.
If I wake up on a Wed morning having not slept, and during my morning study and gym sessions i don’t feel great… taking that day off messes up my week right?
But what if i bind my weeks differently, dynamically?
If i say a trading week is 3 days, but those days don’t have to be consecutive… ie a week could be Tue, Thu, and Tue of the following week, doesn’t that alleviate the problems in linear scheduling and sub optimal days but still provide performance benefits?
In essence i don’t feel pressure or friction about taking a sub optimal day off because it doesn’t mess up the week and it’s perceived potential. The week pauses and then continues optimally to it’s conclusion.
I will trial this idea in August to see what issues get thrown up.
As discussed as Price is not fixed in regards to time but dynamic, shouldn’t our approach to time reflect this? I heard pretty early on in my trading that our biggest advantage as retail traders is the flexibility in that we don’t have to be in the market all the time. Could this be a practical way to reap a benefit?
I know, i know… it’s a bit brief.:32:
Have a great day guys.