Why can’t you resolutely implement the trading system?
To be a successful trader, executing trades perfectly is the hardest part. It is easy to spot opportunities in the market, but more difficult to act on them. There are several reasons, and to understand them you need to understand the nature of a trading system (any method of identifying future buying and selling opportunities), and you also need to understand the relationship between a trading system and the market.
Excellent trading systems make money in the long run. Many excellent trading systems have been publicized for many years, but not many traders make money. The problem with trading systems is that market trends are ever-changing, and trading systems only define market behavior in specific ways. The trading system mechanically reduces the influence of human behavioral characteristics on the probability of how the market will move next. The market has countless possibilities, and the trading system only captures limited behavioral characteristics. Patterns that have appeared in the past may or may not repeat themselves. Therefore, until the end, we have no idea whether this model actually works. People always have great psychological barriers to uncertain things.
Most people think they are okay with taking risks, but actually want certain results. When trading, everyone does not want to lose money, and everyone thinks that the transaction will make money. In fact, all trading systems will have a certain proportion of losses. So we naturally want to confirm profitable trades and avoid losing trades, and it is difficult to escape this temptation.
Experienced traders know that trying to surpass their own trading system will only make them feel super depressed. Sometimes the signals given by the system are completely opposite to your logical analysis. Sometimes the system will prove that your logical analysis is wrong. Sometimes you use the system signals and end up losing money. You have to understand that the trading system is not for you to guess, and its signals are not absolutely correct. The trading system simply analyzes past data to give you a possible outcome with a probability advantage.
Compared with trading, because the results of gambling are random, it is easy to accept risks. When gambling, you know that the outcome is random, so you don't try to predict the outcome, and therefore you are not responsible if you lose money while gambling. However, the results of trading are not random. Traders trade based on their own beliefs and expectations, which leads to price fluctuations and creates opportunities and results. Each trader enters into a trade based on his or her own beliefs, which also affects the outcome. Because the behavior of traders is a collective behavior, the results of their behavior are not completely random. If traders don’t have their own opinion about the market, why would they want to prove that they are smarter than the trading system?
You do not have to be responsible for the results of random events, but you are responsible for the results when trading, which is difficult to avoid. The greater the responsibility, the greater the risk to your ego, making it difficult to engage. When trading, if you don't think well, you blame yourself, and there are so many things that can make you think poorly.
In addition, when you are trading, information is flying all over the sky, and you have certain expectations for the future based on certain information, but your technical trading system does not take this information into account. As a result, the results the information tells you are contradictory to the results the trading system tells you. This is why it is difficult for people to execute the signals of technical trading systems. People are not accustomed to thinking in terms of probabilities—we have not been taught how to use mathematical formulas to analyze the probabilities of mass actions since childhood.
To correctly execute the signals of a trading system, you need to add two concepts to your mental framework - thinking with probability and connecting the system's numbers and behavior. Unfortunately, we can only learn this knowledge by doing it. When most traders use the system, if they encounter 2-3 consecutive losses, they lose confidence in the system, but this is a normal phenomenon and is the same in most trading systems. This puts people in a dilemma. If you don't believe in it, how can you adopt it? Unless you have been using it for a period of time and have accepted it in your heart, you will not believe it. It is for these reasons that I believe that self-discipline must be exercised when executing transactions in order to achieve perfect execution.