Who is Taking Your Trades?

Who is taking your trades? Is it you or your trading method?

Every day I see traders blindly following the signals given to them by their trading method. It is almost as if they’re mindless robots just jumping in because their method says get in. They throw money into the market without even thinking, and it costs them big.

What is a Traders Job?

A trader’s job is not to mindlessly stare at a screen and blindly jump into a trade because their method tells them to. A trader’s job is to take their trading method’s signal and analyze whether or not the trade is viable.

Being a trader is so much more than having a good trading method. Conquering this market is about being able to fully analyze your trade opportunities first and deciding whether or not to enter second.

Just because you have a method that says “enter on a break of this support/resistance line” it does not mean you have to enter. If your analysis suggests that the trade has a low probability of success you should not take the trade. The issue is most traders do not analyze the market they just follow their trading method. They let their methods own them and they lose.

Before you take a trade you need to be able to look at your chart and get an idea of what is going to happen. Then, and only then, should you consider entering the trade suggested by your trading method. In my method, when I look at an upcoming line break on my chart I ask myself:

1. What happened last time it approached this line/area?
2. What does the candle movement leading up to this point suggest?
3. What does the current price movement suggest?
4. If triggered and entered what possible complications can this trade have?

After doing my analysis, and answering these questions, I ask myself the most important question of all:

“Considering all these things should I take this trade?”

It is not all black and white and you do not enter because your method says enter. The decision to enter rests with you. With every single trade, you need to analyze the market first and decide whether or not to enter second.

Inside you are the tools that will make a world of difference in your trading. With these tools humanity has conquered the world, conquered space, and even conquered nature. The most important of these tools is the human brain. Ninety-nine percent of traders do not use their brain to their full potential.

If you are afraid of using your mind and you want trading to be a 1, 2, 3 simple process then go away. I am serious because this is not the business for you. You will never make it so don’t waste your time. The lottery or slot machines are more your game.

If instead you want to be a trader you better start being more inquisitive. It is human nature to ask questions. Don’t suppress it in your trading question everything. Use that amazing tool you have locked away in your head and THINK!

You need to think and analyze everything on your chart and you have to learn to put your trading method in its place. You’re the boss of you trading method. If it gives you a suggestion you are the one who decided whether or not to take the trade.

Originally posted on 4-13-2010


  • Dogwood

    Good post!!!

  • Xavi

    I remember I made a system that worked like a charm in late 2011, was a disaster since January and made me loss 7% on a Feb. Then I got back to trade the way I liked and now I’m feeling much more happy and profitable again.

  • trade machine

    Perhaps, it’s not an easy job because they have to make a deal to other people. Well, it’s always part of the business and it depends on how they talk to their customers.

  • Lorenz

    Hello everybody,
    I think that this very good post must be correctly intended, in particular by the mechanical traders, and, in any case doesn’t say that “discretionary is the way”.
    An algorithmic trader *must* follow the rules of the system, in any case, IMO. But, but… he had to THINK and to DO THE HOMEWORKS (and really a lot) first of all *before* trading a certain system (rules, behaviour and worst case scenarios must be well known in advance) and, subsequently, analyze the results from the live trading.

    Algorithmic trading has nothing to deal with the “set and forget” approach: I personally find it, in comparison to the discretionary, not less time consuming (just the way you use your time is different) and even psychologically definitely not easier.

    Best regards from Germany.

  • Jean-Philippe B.A.

    I got to say a word about this post; fantastic!
    People have left messages saying nonono a system is Da way to do it and won’t understand that Who is Taking Your Trade is not about acting like an improvisator, It’s just keeping your brain in the hood, challenging the system (just refer to market conditions adaptation necessity!)

  • Adam

    i trade a simple 1,2,3 strategy. i am profitable, i give out free charts and entries on twitter. does this mean i should go away since my simplicity is obviously to hard for some people to grasp? no it means i should ignore shit like this and continue to snag pips while you sit around asking 900 questions

  • akeakamai

    Best advice. To me, trading is a game of confidence, and if you don’t have confidence in yourself (and your brain) then you will get SHOOK!

  • akeakamai

    Best advice. To me, trading is a game of confidence, and if you don’t have confidence in yourself (and your brain) then you will get SHOOK!

  • lasereyes

    This is a good idea, everyone should be a discretionary trader.

  • lasereyes

    This is a good idea, everyone should be a discretionary trader.

  • PipinTheMidnightOil

    Thank you for taking the time to post….

    You are one of the fotunate traders with the ability to predict the future?

    “Before you take a trade you need to be able to look at your chart and get an idea of what is going to happen.”

    There are 2 possibilities. Bull or bear. lol

  • PipinTheMidnightOil

    Thank you for taking the time to post….

    You are one of the fotunate traders with the ability to predict the future?

    “Before you take a trade you need to be able to look at your chart and get an idea of what is going to happen.”

    There are 2 possibilities. Bull or bear. lol

  • ashag28

    discretion is key.

  • ashag28

    discretion is key.

  • sunglow

    I normally agree with much that you say, but I am afraid that on this occasion, I have to disagree. You say that the trader should analyse the situation and assess if the trade is viable. I agree on that point, but where I disagree is that it should not be done on the hoof. Surely a trading system has been built up by analysing situations over a period of time. So when you are implementing your system, you are benefiting from this period of analysis. If you are making decisions on the hoof, you are asking too much of your mind. You find yourself asking all sort so of questions that are just confusing and do not help in a pressured situation where the market does not pause whilst you come to a conclusion. The human mind is good, but it is not all that good. If I give you a list of ten words describing another person, your perception of that person will vary depending in the order that I put those descriptive words. So let us accept that the human mind has its limitations. A big problem with the human mind is emotion. You have to be ice cold not to let emotions creep into your trades and this is where a system helps. Once you start venturing outside of your system, emotions come into play and that is not a good basis for trading. Another problem is also down to the frailties of the human mind. I wake up one day and I am cheerful and confident. The next day, I am in a bad mood and there is more doubt in my mind. That means that given similar situations, I am likely to react differently depending on which side of the bed I got out that morning. The problem with doing that is there is no consistency and you cannot look back and pin point where you have been going wrong. Surely the answer is to detail every trade on a spreadsheet and then you can sit back at the end of a day when trading is over and critically analyse what you did. This analysis can be done with a cool clear head free from any emotions that surrounded the trades at the time. Over a period, this gives you some pretty concrete guidelines as to what to do in a given situation, but is this not what they call a system?

  • sunglow

    I normally agree with much that you say, but I am afraid that on this occasion, I have to disagree. You say that the trader should analyse the situation and assess if the trade is viable. I agree on that point, but where I disagree is that it should not be done on the hoof. Surely a trading system has been built up by analysing situations over a period of time. So when you are implementing your system, you are benefiting from this period of analysis. If you are making decisions on the hoof, you are asking too much of your mind. You find yourself asking all sort so of questions that are just confusing and do not help in a pressured situation where the market does not pause whilst you come to a conclusion. The human mind is good, but it is not all that good. If I give you a list of ten words describing another person, your perception of that person will vary depending in the order that I put those descriptive words. So let us accept that the human mind has its limitations. A big problem with the human mind is emotion. You have to be ice cold not to let emotions creep into your trades and this is where a system helps. Once you start venturing outside of your system, emotions come into play and that is not a good basis for trading. Another problem is also down to the frailties of the human mind. I wake up one day and I am cheerful and confident. The next day, I am in a bad mood and there is more doubt in my mind. That means that given similar situations, I am likely to react differently depending on which side of the bed I got out that morning. The problem with doing that is there is no consistency and you cannot look back and pin point where you have been going wrong. Surely the answer is to detail every trade on a spreadsheet and then you can sit back at the end of a day when trading is over and critically analyse what you did. This analysis can be done with a cool clear head free from any emotions that surrounded the trades at the time. Over a period, this gives you some pretty concrete guidelines as to what to do in a given situation, but is this not what they call a system?

  • pip72

    This is the best post I’ve read in a long time!

  • pip72

    This is the best post I’ve read in a long time!