The quest for edge

My code consists of a Bruce Lee-ian approach to trading, with a solid ground of good habits (consisting of a cue, routine and reward).

Focus on my reactions to trading; I don’t know if I will make money today, but I expect to trade well. The market will do what it will do. I’m able to detach myself from the outcome of every trade; Detachment: it’s so easy when you’re not in it. Focus is on the ability to detach, (identify the problem) and execute. If you have done the statistical work and have a defined edge, when in trading detach yourself from the noise (everything that distracts and leads to increased chances of trading errors) and execute properly according to daily hypotheticals and overall plan. Even though it might seem on the surface that we are enjoying the freedom to do whatever we want at any given moment instead of following a trade plan, the fact is that leads to little or no freedom at all.  We develop bad habits and often become a slave to them despite probably telling ourselves “I won’t do that again”.  Simply saying it, we find, isn’t enough.

The market is the mechanism by which prices are advertised for the continuous two-way auction.  Due to the fact that the majority of my trading is conducted intraday and the fact that I can never know for sure which direction the market will move, homework involves scouting both the buyers and the sellers participating in the auction.

Process of identifying opportunities: 1) pattern recognition = reference point, 2) Price Action = Edge = Information in the present = what is physically happening (add in to a trade, use risk/reward matrix), 3) Technical Confirmation = lagging signal.

The quest for Edge

Beware: far worse than simply not taking the trades, there have been many times where I found myself taking trades that were a direct contradiction to the data I have. So process block to check if trade is not contradicting statistics should be built in. For a process or habit to stay changed, people must believe that change is possible.