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BGiroux wrote:
>
> Hello,
>
> I have a good mechanical system that works well for me. I have found
> that one of the most important parts of my trading activity relates to
> my willingness to pull the trigger when the system generates the
> signal. My hesitation results in my profitablity being reduced. I
> would be interested in finding out if anyone else has had this problem
> and if anyone might have a constructive suggestion.
>
> Thank you,
>
> Bruce Giroux
Bruce,
I believe that almost everyone experiences this phenomena from time to
time. There are many work arounds, but these are not solutions. First
and foremost, we need to learn that we will never know, and we do not
need to know. Bob Koppel, an exceptional trader and author made this
statement in a workshop I attended four years ago. It took me two years
to understand that simple statement. When you put on a trade, you place
your capital at risk. Risk is something that we have been taught to
avoid. In trading, our job is to manage risk, not avoid it.
Now, you say that you have a very good mechanical system. Perhaps you
do not have a good system. Perhaps you have an excellent entry method.
Let me explain. If you have tested your system, you know it is not 100%
accurate. It it was 90% profitable, you would never know when the other
10% would surface. Think about that: right 900 times out of a 1000.
What will this next signal be: one of the 900 rights or one of the 100
wrongs? Now Mr. Koppel's statement: you don't know, you will never know
and you do not need to know.
If you have a good system, you will have your entry point, your profit
objective, your re-entry technique and your exit method. You have, as
most do, spent a considerable amount of time developing an entry that
proves to be successful. As much time should be spent developing an
exit. The entry enables you to produce profit. The exit enables you to
perserve capital. When you perserve capital, you can come back another
day.
When I had the problem of picking up the phone, I was advised to write
my entry, target, re-entry and most important, my exit BEFORE I entered
the trade. Remember, before you enter you can be objective. After you
have entered the trade, you have a position and cannot be totally
objective.
I would offer that if you put together your TOTAL system, write you plan
on your chart, then you will be better prepared to simply follow your
written instructions. You know you systems profitability factor. If
the trade fails, you are not personally at fault, you did what your
system dictated you to do. Just think: I do not know, I will never
know, and I do not need to know---because I have planned my exit and
therefore managed my risk (loss).
Al Taglavore
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