A Trader Journal

I think understanding why we do things that are not in our best interest and then intiating a change is more effective than trying to change by will power alone. Following are some reasons that cause us to outguess our system -

Most people like to think of themselves as risk takers, but what they really want is a guaranteed outcome with some momentary suspense to make it feel like the outcome was in doubt. The momentary suspense adds the thrill factor necessary to keep our lives from getting too boring. However, when it comes right down to it, no one trades to lose or puts on a trade believing it is going to be a loser, and all systems will definitely have some percentage of losing trades. So it's difficult not to be tempted into trying to guess which ones are going to be the losers and not participate.

Another reason - We often form expectations about the future with information that method don't take into consideration. Consequently this sets up a conflict betwen what our intellect says should be happening and the prediction of human behavior offered by our well tested method.

Another reason - If we risk our money on a gambling event that we know has a random outcome, then there's no rational way we could have predicted what actually happened. Therefore, we don't have to take responsibility for the outcome if it isn't positive. Whereas, with trading, we believe future is not random i.e., price movement, opportunity and outcomes are created by traders acting on beliefs and expectations of the future. So we form a concept of future and how that will affect the markets. This adds an element of responsibility, desire to over analyze and outguess our method.

My experience is trying to out-guess a well tested method is often an exercise in frustration. Sometimes the signals we get from a trading method will have us trading in ways that are contrary to our reasoning and turn out to be right. Other times, you will agree with the method and it will be wrong.

In short, trading methods are not designed to be out-guessed i.e., they aren't designed to give us isolated signals of an opportunity to be taken when it seems right. Their job is to define and categorize past relationships in collective human behavior and give us a statistically probably outcome of the future. (Credits: Source - Mark Douglas material).

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