Monday, March 08, 2010

Planning and Executing Trades in the Real World

"No battle plan survives contact with the enemy," Field Marshall Helmuth Carl Bernard von Moltke once observed. What Clausewitz described as the "frictions" of war ensure that chance occurrences and the unexpected will interfere with the best laid plans. The task of the successful leader is to minimize these frictions with superior planning, but also to anticipate the unexpected and be ready to adjust plans accordingly.

We hear a great deal about formulating trading plans and the importance of sticking to plans. In the corporate world, business planning is vitally important--and yet those plans evolve with shifting economic conditions. Similarly, military strategies are carefully formulated, but tactics evolve as new information becomes available.

There is much more to successful trading than creating a plan and robotically following it. How do we adjust plans without abandoning them? How do we adapt to shifting market conditions without losing discipline?

I see little written on the real-world process of developing and executing plans; more on this topic shortly.



RoachApproach said...

His name was: Helmuth Karl Bernhard von Moltke.

Gro said...

This is a problem I have faced recently when market conditions changed back in mid-January. I had written down my setups with very detailed entry/exit procedures but all of a sudden, the setups seemed to never appear again if I followed my rules to the letter.

Since then, I have learned to adapt but feel a little unconfident because I am not exactly following my plan. However, I have learned an important point which is to extract the essence of a setup.

uempel said...

Hi Brett, you've got the knack to touch so many interesting topics - I am always amazed by the breadth of the themes you raise. I enoy reading your blog very much.

My Trading Edge said...

Hi Brett,

I agree - in fact I haven't seen anything written on it!

I began working with Alexander from Pride Trading to improve my intraday trading performance. I feel SO MUCH better now that a more experienced trader is encouraging my adapting to real-life market conditions (i.e. not robotically following plans)....having someone else's acceptance increases confidence to keep working at adapting.....

also, most aspiring traders are unaware of a difference existing between "being-disciplined" and "being-adaptive"