My friend Martin in the chat room wrote:

Here are the key ingredients - as I see them - to make my discretionary trading consistent. These are the main lessons I have learned from TFL, and am hugely grateful to all who have helped me see the importance of these concepts.

I know for certain, that in a previous trading live my account would have margin called this week, and I only survived with a modest loss because I adopted the below to some degree.

(1) Small size - There is no doubt in my mind at this stage, that if one wants to hold positions over a period of time, the trade size need to be small relative to the account, and the longer one wants to hold, the smaller the size needs to be. I am also increasingly convinced that for this approach it makes more sense for me to be using the robots. Tying in with this, I also continue to question the use of a larger 2nd trade size on the robots. I think if using a 2nd trade, then the total size of both trades still needs to be small relative to the account size.

(2) Currency exposure - This is still a pit which I fall into repeatedly on discretionary. When one sees seemingly perfect setups, it is easy to open multiple correlated positions. On the robots this is not so much of an issue, because one sets the pairs in advance. It is probably a good idea to adopt the same approach to discretionary. Define the pairs one wants to trade to limit the exposure.

(3) Don't let losses get out of control (& focus on equity value)- One positive take home from this week is that I did close out losers. Gold broke through mental stop, and even though I was reluctant to close because it had dropped well below this level, I did close. Grateful I did as continued to fall. Same with GBP (2nd entries). It is tempting to think that this cannot drop much further, but I am so grateful that I stuck with my rule of having a clear stop for my 2nd entries.

(4) Focus on what works - This is where I think my main problem lies with my discretionary trading. What has worked well for me (which I define as having translated into consistent profits) is taking trades off lower time frames which are aligned with higher time frame outlooks & oversold/overbought indicators, and banking profits quickly. These last couple of weeks I deviated from the bank quickly approach, to holding positions. I have been visiting charts morning and evening, and opening or closing trades mostly at these times. I am increasingly realising that it is better to not trade, than deviating from what works. Which brings me to my second major issue with discretionary:

(5) Fear of missing out - I still feel an urgency to take on trades, even though when I take the time to pause I am aware that there is an endless stream of opportunities flowing by, I need to re-align my approach on discretionary trading in such a way that it fits schedule while letting me focus on what works. In view of the above, I am thinking that a better fit to my trading would be to focus on specific times of the day or week when I can commit myself to spending screen time.

(6) Always be aware of the risks – These sharp moves seem to happen every few months. It is essential that we fully understand and accept this risk, and make sure that my trading strategy reflects this. It might be relatively easy to write off a 10% overnight loss on a small account, but what about if the account was 10x or 100x larger?

For more information:

http://robbooker.com