Getting It Right

The following is from an email I received from a person who is getting it right. I break into the middle:

"...Here is where I see that self-control and discipline are paramount; I mean after seeing a perfect pattern form and me not taking the trade due to discretion -- BUT in fact, giving away a juicy profit - it is really KILLING my emotions. If I take the failure of a trade personally after my discretionary decision, I end up thinking it might affect my future judgement.

"It is also a problem because in my case I am looking at only one market and WAITING for the RIGHT trade to happen, which can be extremely BORING. So I have to be strong about not taking trades just for the sake of fun.

"The most interesting and contradictory, at least for my evolving mind, is that the fewer trades I do but the more filtered the discretion, the BIGGER the PROFIT! I made a theoretical calculation: If I would have traded all signals as they presented with no discretion, I would have made 250 pips during that time. However, if I would have taken only half of those that I filtered I would have made almost 500 pips."

It is completely true, from my own experience, that trading less is more profitable than trading more. Of course your broker will encourage you to do just the opposite. Brokers love it when you churn your own account. We have proven through numerous tests - our own and results from our students - that trading less often with more contracts is more profitable than trading more often with fewer contracts. It would seem that this is obvious, but most people don't see it. The less often you trade, the less often you are at risk. The trick is to trade for fewer ticks - but trade less often with more contracts. The result is that you lower risk considerably, while raking in greater profits on higher percentage trades.

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